In a recent tweet, US President Donald Trump announced that, beginning 1 October 2025, 100 per cent tariffs would apply to branded or patented pharmaceutical imports into the US—unless the foreign company is actively building a drug-manufacturing facility on American soil. On paper, this is presented as a nationalist industrial policy: “Produce in America or pay,” with the intention to bring supply chains home. But in reality, it is less an incentive and more a blunt instrument of protectionism.
India, called the “pharmacy of the world”, producing around 20 per cent of all generic medicines globally, supplying nearly 60 per cent of vaccines, and housing the largest number of US FDA-approved manufacturing sites outside the United States, as noted by the India Brand Equity Foundation, must not take this lying down. What may sound like a threat can just as easily be spun into an opportunity—a potential gold mine for wily policy makers willing to move fast.
The façade of localisation
India’s $30 billion drug exports supply 90 per cent of US prescriptions. Trump’s tariff plan, framed as promoting domestic capacity, is in practice a demand for market access in exchange for forced relocation—a heavy hand to squeeze foreign firms into captive production.
The history of US tariffs confirms what we already suspect: consumers, not exporters, absorb the burden. Past tariff spikes have largely been passed down the supply chain to US firms and end-customers—not borne by foreign suppliers. The Indian economy cannot pretend this will be otherwise.
The deeper deception lies in the rhetoric: this “localisation” is about the US reasserting control over global value chains. The escalation is not only a political posture for the US. The pharma oligopolies’ strategies have ensured that profits keep flowing to American corporations.
India’s role in the US pharma supply chain
The devil is in the fine print: many Indian firms export “branded generics” along with generic medicines and that ambiguity gives US regulators leeway to redraw the lines.
Moreover, there’s a hidden channel: Indian-made medicines are often relabelled, repackaged, or rebranded before being sold in global markets. A pill made in Hyderabad or Visakhapatnam may travel to a foreign country’s corporate hub, and then be re-exported under a different label to Latin America or Southeast Asia. That profit accrues to foreign firms; the Indian manufacturer remains the invisible—yet indispensable—supplier.
Many common supplements, such as calcium, are sold as Western brands—but substantial production happens in India. The real value piles up with the Western brand owner, not the original producer .
What many in Washington forget is that the US healthcare system is deeply reliant on the affordability and scale that Indian generics bring. Any shortage or sudden cost escalation would ripple through insurers, government programmes, hospitals, and patients’ co-pays. During COVID, Trump called Prime Minister Narendra Modi for hydroxychloroquine—proof that US demand leans heavily toward Indian production when pressures mount.
Tariffs that double prices overnight, or force supply chain reallocation, risk triggering shortages of vital drugs. The US cannot easily reconfigure pharmaceutical capacity in a few months. Moving complex generics or sterile injectables requires years of regulatory compliance, capital investment, and supply chain realignment—not a switch flipped at the stroke of policy. These unreasonable tariffs are shortsighted, and the American common man will suffer due to a hiccup in the pharma supply chain.
And on the financial side, Indian firms disproportionately get squeezed. Dr. Reddy’s, for example, is estimated to have about $1.5 billion of FY 2026 revenues linked to the US market.
Many Indian firms, including Zydus and Dr. Reddy’s, derive 30–45 per cent of their sales from the US market, according to equity research. The rest of their global portfolios may not offset a sudden disruption.
While financial growth and markets matter for manufacturing, we cannot overlook the need for trained specialists who can deal with pharmaceuticals. So yes, this poses a danger for India. But it is also a moment of reckoning and strategic recalibration.
Hidden opportunity for Indian firms
If the US is attempting to force localisation, India should respond aggressively with a proactive agenda. Here’s how:
Own the brand, not just the production
Indian manufacturers should push to market their own labels in Latin America, Africa, and Southeast Asia. Let the world know: yes, American-branded drugs may come from India—but they can be bought directly from India too.
Strategic alliances and regional hubs
Build manufacturing and regulatory hubs in partner countries (e.g., Latin America, Southeast Asia, Africa) to bypass US re-labelling chokeholds. Where local regulations allow, or where trade agreements exist, set up joint ventures or wholly owned plants in those markets so US tariffs become irrelevant.
Regulatory acceleration, compliance, trust signal
India must continue to raise the bar for regulatory compliance (U.S. FDA, WHO-GMP, etc.). Firms with strong compliance track records should get diplomatic and export support. Preferential export financing, brand promotion, and risk-sharing (insurance, trade credit) must back these name-brand Indian exporters.
Negotiated trade safeguards
India must engage multilaterally—through the World Trade Organisation, G20, and bilateral channels—to challenge overly broad tariff terms, especially when they impinge on generic medicines. The line between branded and generic must be clearly defined. Use trade remedy disciplines to prevent disguised protectionism.
Strengthening internal capacity to supply higher-value drugs
Indian firms should accelerate internal R&D to move up the value chain—from generics into biosimilars, specialty injectables, complex APIs—so that more of what gets exported is harder to relegate to commodity tiers. After all, if we could produce one of the safest COVID-19 vaccines, Covaxin, and distribute it internationally, what is the roadblock for our pharma exports?
Also read: ‘India is worst’ in Trump’s America. What’s behind the U-turn
Why Americans ultimately lose
Trump’s tariff plan is reckless from an American perspective too. When protectionism inflates drug costs, American insurers, Medicare, Medicaid, and—ultimately—US patients pay more. The tariff burden cascades into health budgets, taxpayer subsidies, and higher co-pays. In the end, Americans lose access or pay more for once affordable drugs.
India has a huge opportunity to tap the Latin American markets. I signed an MoU with Colombia, where the Indian pharmacopoeia has been officially accepted. This is an important step for ensuring an effective entry into the country to export drugs and raw materials, with Colombia serving as a gateway to other South American markets. India has consistently been one of the largest suppliers of pharma raw materials to Colombia, and this could see a potential rise.
Similar acceptance agreements with countries like Chile were in the pipeline when I demitted office. I hope the government of India continues this agenda to advance ‘Make in India’ while providing comparatively low-cost, high-quality healthcare products to the world.
If New Delhi acts with urgency, it has a window. As US corporations scramble to re-anchor supply chains, Indian firms can step in not merely as contract manufacturers, but as independent exporters. Indian identity in global drug markets has been too faint; now is the moment to sharpen it.
The tariff is a sword of Damocles hanging over our heads—and can be redirected as a challenge. Are we going to accept being perpetual back-room suppliers, or step up as rightful brand owners?
Time is running out. India must double down, not dither. If we succeed, the very tariff meant to force us into servitude could become the spark of a new global frontier for Indian pharma.
Meenakashi Lekhi is a BJP leader, lawyer and social activist. Her X handle is @M_Lekhi. Views are personal.
(Edited by Ratan Priya)