US reciprocal tariffs: Indian pharma's exemption highlights dependence on generic meds

President Donald Trump, in a historic move to counter high import duties on American goods, announced reciprocal tariffs on around 60 countries on Wednesday.

India was hit with a 27% tariff, citing its high duties on US imports.

However, pharmaceuticals and other essential goods have been spared from these increased tariffs.

“The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security,” Jain stated, according to PTI.

He highlighted the robust India-US trade relationship, noting their shared ambition to double bilateral trade to $500 billion under the Mission 500 initiative.

Pharmaceuticals remain central to this partnership, with India playing a key role in global and US healthcare by supplying affordable medicines.

The Indian pharmaceutical industry is committed to bolstering medicine supply chain resilience and reinforcing national security by ensuring widespread access to affordable drugs, Jain added.

IPA represents 23 leading Indian pharma companies, including Sun Pharma, Dr Reddy's Laboratories, Lupin, Torrent, and Glenmark.

Bhavin Mukund Mehta, Vice-Chairman of Pharmexcil and Whole-Time Director of Kilitch Drugs, pointed out that the pharmaceutical sector is a key beneficiary of the tariff decision.

“With India importing $800 million worth of pharmaceutical products from the US and exporting $8.7 billion, the strong trade ties between the two nations create a powerful win-win scenario,” he said, reported PTI.

The exemption is expected to drive significant cost savings and enhance India's competitiveness against Asian counterparts, further solidifying its leadership in the global pharma market.

Mankind Pharma CEO Sheetal Arora said Trump's decision is more than just a tactical move—it recognises the US healthcare system’s dependence on India’s generic drug manufacturing and China’s API production.

He warned that any disruption in this supply chain would have severe consequences for patient care, as building alternative domestic manufacturing capabilities in the US would require years of investment and regulatory adjustments.

“It’s heartening to see our longstanding partnership with the US being recognised—this relationship has fostered an environment where open dialogue can lead to mutual growth,” Arora was quoted as saying by PTI.

He also noted that the exemption presents a strategic opportunity for India to reshape its pharmaceutical sector by focusing on next-generation generics, accelerating biosimilar development, and expanding API production.

Initiatives such as the Production Linked Incentive (PLI) scheme, along with targeted R&D incentives and regulatory harmonisation, provide a strong foundation for this transformation.

India’s pharmaceutical exports, its largest industrial export category, were valued at $12.72 billion in 2024.

Indian firms supply a substantial portion of drugs to US consumers, with four out of ten prescriptions filled in the US in 2022 coming from Indian companies.

Industry sources estimate that Indian medicines saved the US healthcare system $219 billion in 2022 and $1.3 trillion between 2013 and 2022, with another $1.3 trillion in savings expected over the next five years.

Earlier, sector experts had warned that higher tariffs on pharma imports could have severely impacted Indian drug manufacturers, raising production costs and reducing competitiveness.

Smaller firms, already operating on thin margins, could have faced significant financial strain, potentially leading to industry consolidation or closures.