Explained - How Donald Trump's tariff announcement impacts Indian Pharma companies

US President Donald Trump on Wednesday, July 22, announced a timeline for imposing tariffs on generic pharma drugs being brought into the US starting August 1, 2026. This puts Indian Pharma companies, Sun Pharma, Lupin, Cipla, among others in the spotlight.

In a post on Truth Social, the US President wrote that all generic drugs being brought into the US will have no tariffs for a two year period. Following which, the tariff will be raised to 100% from August 1, 2028 and then to 200% by August 1, 2029.

"This is being done to reshore generic Pharmaceutical production into America, with a penalty to those companies that decide not to build plant and equipment within the stated period of time given to them," Trump's post read further.

Trump's earlier tariffs in this sector pertained to branded and patented drugs, the policy of which has been left unchanged. The earlier policy had left out generic drugs, as nearly 90% of the US prescriptions comprise of them.

The Trump Administration had begun a probe of the pharmaceutical industry on national security grounds under Section 232 of the Trade Expansion Act. It also launched a direct-to-consumer discount drug sales platform known as "Trump RX".

How Do Indian Pharma Companies Get Impacted?

90% of the US market for Indian drugmakers by volumes is via generic drugs. Out of the total generic drugs imported by the US, 40% come from India.

Indian Pharma exports are valued at around $10 billion to the US and the country also has the largest number of USFDA plants outside India at around 670.

Manufacturing a drug in India costs 30% to 50% less than the US. The feedback from many in the industry so far is that it remains to be seen how will this be executed and then the progress after Donald Trump's term comes to an end.

According to analysts, bringing generic manufacturing to the US is very difficult due to constant price erosion, high competition, number of dosage types and strict manufacturing quality.

They went on to add that building such large volume capacities locally could now take decades as the US has now lost the edge in low cost generic manufacturing.

Which Indian Companies Has Presence In The US?

Multiple Indian companies have manufacturing presence in the US. Aurobindo Pharma has a substantial local manufacturing footprint, along with companies such as Dr. Reddy's Laboratories, Lupin, Cipla and Zydus Life, who also have operations in the country.

However, companies like Alkem Labs and Torrent Pharma are fully dependent on Indian manufacturing units and do not generate enough from the US.

Companies such as Biocon depend on India and Malaysian units for biosimilars and generic manufacturing, while Senores Pharma could benefit due to its local manufacturing presence for the US generic markets.

The Nifty Pharma index is among the best performing sectoral indices so far in 2026 with gains of 15%. Stocks like Gland Pharma, Laurus Labs, Sai Life Sciences, Aurobindo Pharma, Wockhardt, And Torrent Pharma have gained between 30% to 45% so far this year. 17 out of the 20 Nifty Pharma constituents, barring Abbott India, Dr. Reddy's Laboratories and Cipla, have delivered positive returns so far this year.