Donald Trump slaps 100% tariff on branded drugs import from October 1: What it means for Indian pharma industry?

United States President Donald Trump on Friday announced a fresh wave of tariff on products like the branded or patented drugs, which are not made in the US and imported into the country. Such products will face a 100 per cent tariff starting October 1, 2025.

He, however, said that companies that are building facilities in the US would be exempted from the fresh tariff. Trump, announcing the decision to slap tariff on Truth Social, said companies that are either "breaking ground" and/or "under construction" would be exempted.

Trump has long maintained that tariffs are the key to forcing companies to invest more in domestic factories.

What this means for Indian industry?

Many large Indian pharma companies derive between 40 to 50 per cent of their total revenue from the US market, according to reports.

Thus, imposing tariffs on the pharmaceutical Industry is likely to have a direct impact on the Indian pharma companies, as nearly 40 per cent of India's total pharma exports are directed to the US market, according to a report by SBI Research.

It was reported earlier that even 50 per cent tariff on export of pharmaceutical products will affect the earnings of the Indian pharmaceutical companies by 5 to 10 per cent.

SBI stated earlier that "a possible tariff of 50 per cent on pharma exports may hit earnings of pharma companies by 5 to 10 per cent in FY26, as many big pharma companies' revenues from the US stood in the range of 40-50 per cent".

Around 40 per cent of India's pharmaceutical exports were directed to the United States in FY25 and India's share in the US' total pharma imports stood at 6 per cent in 2024.

'Will not impact generic makers'

Reacting to the development, Indian Pharmaceutical Alliance (IPA) on Friday said the move will impact only patented and branded products, not generic medicines.

IPA Secretary General Sudarshan Jain said in a statement, "It is not applicable to generics medicines." Trump's statement refers to patented and branded products supplied to US, he added.

Pharmexcil Chairman Namit Joshi said, "India has long been a cornerstone of the global supply chain for affordable, high-quality medicines, supplying nearly 47 per cent of the US's pharmaceutical requirements. 

"The proposed 100 per cent tariff on branded and patented pharmaceutical imports is unlikely to have an immediate impact on Indian exports, as the bulk of our contribution lies in simple generics and most large Indian companies already operate US manufacturing or repackaging units and are exploring further acquisitions." 

Current investigations under Section 232 appear focused elsewhere and have not taken a direct call on generics, he said, adding, "nonetheless, it is prudent to remain prepared for future policy shifts and to build risk-mitigation strategies".

Which are the other products affected by fresh wave of US tariff?

President Trump on Thursday also slapped a fresh round tariffs on goods such as trucks and kitchen cabinets. While a 25 per cent tariffs was announced on heavy-duty trucks, Trump also said he would start charging a 50 per cent tariff on kitchen cabinets and bathroom vanities and a 30 per cent tariff on upholstered furniture. All new tariffs will take effect from October 1.

The new actions are seen as part of the Trump administration's shift to better-established legal authorities for its tariff actions, given the risks associated with a case before the Supreme Court on the legality of his sweeping global tariffs.

The US Supreme Court on September 9 agreed to decide the legality of Trump's sweeping global tariffs, setting up a major test of one of his boldest assertions of executive power that has been central to his economic and trade agenda.

With agencies inputs