On September 26, 2025, U.S. President Donald Trump sent shockwaves through the global pharmaceutical industry by announcing a 100% tariff on branded and patented pharmaceutical imports, effective October 1, 2025. The move, which targets companies that have not begun building manufacturing facilities within the United States, has placed India’s $30 billion pharmaceutical export market squarely in the spotlight and rattled financial markets from Mumbai to Wall Street.
Trump made the announcement via Truth Social, writing, “Starting October 1st, 2025, we will be imposing a 100 percent Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. 'IS BUILDING' will be defined as 'breaking ground' and/or 'under construction.'” He clarified that pharmaceutical companies already constructing U.S. plants would be exempt, adding, “There will, therefore, be no Tariff on these pharmaceutical products if construction has started.”
The scope of the tariffs is vast. According to Bloomberg, the new duties could impact roughly $220 billion worth of U.S. pharmaceutical imports. The threat looms largest over blockbuster treatments such as cancer immunotherapies and weight-loss drugs, potentially doubling costs for companies that haven’t broken ground on American manufacturing by the deadline. While major global players like Novartis AG and Sanofi SA have announced large U.S. investments, the details and progress of these projects remain unclear.
India, often dubbed the “Pharmacy of the World,” finds itself particularly exposed. The country supplies over 50% of global vaccine demand, nearly 40% of generics to the U.S., and 25% of all medicines consumed in the UK, according to the Pharmaceuticals Export Promotion Council of India (Pharmexcil). In fiscal year 2025, India’s pharmaceutical exports soared to a record $30 billion, with a 31% year-on-year surge in March alone. The U.S. is India’s single largest pharmaceutical market, accounting for 31% of its exports—about $8.7 billion in 2024, and $3.7 billion shipped in just the first half of 2025.
The timing couldn’t be worse for Indian exporters. As reported by Prospero.ai, the Indian rupee hit a record low against the U.S. dollar in the week leading up to the announcement, while local stocks tumbled 2.5%. Tech and pharma stocks bore the brunt of the sell-off, with the Sensex and Nifty 50 posting their steepest weekly drops since March 2025. The Reserve Bank of India dipped into its $703 billion foreign reserves to stabilize the rupee, but market nerves remain raw amid rising trade frictions and the Biden administration’s recent doubling of H1-B visa fees, which hits Indian tech giants hard.
Shares of key Indian pharmaceutical companies reflected the uncertainty, with stocks slipping between 4-7% on September 26, according to Moneycontrol.com. The Nifty Pharma index closed down 2.14% for the day and 5.2% for the week. Laurus Labs, Biocon, and Zydus Life were among the top losers, while Sun Pharma saw the largest trading volume and a 2.6% drop. Reuters quoted Pankaj Pandey, head of retail research at ICICI Securities: “While we do not have major share in patented drug exports, things are not looking good for market given the string of negative newsflow around export-oriented sectors.”
India’s pharmaceutical sector is no small player. It ranks third globally by volume and fourteenth by production value, with industry projections aiming for $130 billion by 2030 and $450 billion by 2047. Backed by government support schemes like the Production Linked Incentive (PLI) and Strengthening of Pharmaceuticals Industry (SPI), Indian pharma has expanded its global footprint and invested in high-end drug manufacturing, R&D, and quality upgrades. The PLI scheme alone is channeling Rs. 15,000 crore into 55 projects focused on medicines for cancer and diabetes, while the SPI scheme is modernizing labs and supporting smaller companies.
Despite these strengths, the U.S. tariff threat has exposed vulnerabilities. India supplies around 45% of U.S. generics and 10-15% of biosimilars by volume, according to Kotak Institutional Equities. Generic drugs, which account for nine out of ten U.S. prescriptions but only 1.2% of the country’s healthcare budget, are a lifeline for American patients and a pillar for Indian exporters. While generic drug formulations have been exempted from the tariffs for now, any future move to widen the scope could trigger drug shortages and drive up healthcare costs in the U.S.
The sentiment among Indian manufacturers is clear. As reported by Hindustan Times, a Himachal Pradesh-based pharma exporter warned, “If implemented, we will have no choice but to stop supplying drugs to the U.S. Patients there will suffer more than Indian manufacturers.” An Andhra Pradesh manufacturer added, “Our drugs save the U.S. system around $200 billion annually. If tariffs go through, they cannot replace our supply for at least 2–5 years. India will have to explore other markets.”
There are also strategic concerns. Industry representatives have cautioned that tariffs could push the U.S. to rely more heavily on China for essential medicines—a scenario that some say could undermine Washington’s own national security objectives. Karoline Leavitt, White House Press Secretary, pointedly remarked, “We have outsourced our critical supplies chains in our countries. Do we want our life saving drugs and medicine and chips to be made in China or here in United States of America? This is a common sense policy.”
Yet, amid the uncertainty, some Indian industry leaders see a silver lining. Rishad Dadachanji of the Dadachanji group told Hindustan Times, “Tariffs would disrupt supply chains and hurt U.S. consumers, but Indian pharma is resilient. Companies are already diversifying markets, investing in R&D, and exploring new partnerships. This could even accelerate India’s self-reliance in the sector.”
For now, the world waits to see how pharmaceutical giants will respond. Will they accelerate U.S. factory construction to sidestep the tariffs? Will Indian drugmakers successfully diversify into new markets, or will American patients face higher prices and potential shortages? With the U.S. importing nearly $233 billion in pharmaceutical and medicinal products in 2024 alone, and Indian companies supplying a critical share of low-cost medicines, the implications of Trump’s tariff gambit are set to reverberate far beyond the campaign trail.
As the October 1 deadline approaches, one thing is certain: the battle over where the world’s medicines are made—and at what cost—has only just begun.
