Cipla Ltd.

President Donald Trump’s recent executive order aiming to lower U.S. prescription drug prices could significantly benefit India’s pharmaceutical sector. The order, which seeks to reduce drug costs by tying them to prices in economically comparable countries, may inadvertently open doors for Indian drugmakers to expand their footprint in the U.S. market.   India, supplying nearly 50% of generic drugs in the U.S., stands to gain from this policy shift. The U.S. accounts for about 30% of India’s pharmaceutical exports, translating to billions in revenue. Companies like Sun Pharma, Dr. Reddy’s, and Cipla could see increased demand as the U.S. looks for cost-effective drug sources.   However, the proposed 25% tariff on pharmaceutical imports poses a challenge. While intended to encourage domestic manufacturing, such tariffs could impact the profitability of Indian exporters. Industry leaders argue that the U.S. lacks the capacity to quickly replace these imports, suggesting that Indian generics will remain essential in the short term.   Analysts believe that, despite potential short-term disruptions, the long-term outlook for Indian pharma in the U.S. remains positive. The combination of cost advantages and established supply chains positions India to play a pivotal role in the U.S. healthcare landscape.

Indian pharmaceutical stocks faced a significant 1.7% drop on Wednesday, following U.S. President Donald Trump’s announcement of plans to impose a "major" tariff on all pharmaceutical imports. The U.S. accounts for nearly one-third of India’s pharma exports, making the industry highly vulnerable to such threats. Trump’s comments reignited fears after his earlier reciprocal tariffs last week exempted pharmaceutical products, a move which had initially provided relief to the market. However, the sudden reversal in stance caused wild fluctuations in the stocks, with the entire pharma index sliding. Key players like Gland Pharma, Lupin, and Zydus Lifesciences were hit the hardest, with losses ranging between 3% and 5%. Even industry giants such as Sun Pharma and Cipla were not spared, falling 1.69% and 1.87%, respectively. India’s pharma exports to the U.S. predominantly consist of generics, which currently enjoy minimal tariffs. In contrast, India imposes a 10% tax on U.S. pharma imports. Experts warn that any changes to this balance could severely impact trade relations and profitability. The pharma index has now recorded a staggering 14.4% decline this year, underscoring the challenges faced by the sector.

India and China, the two principal suppliers of generic drugs to the US market, are anticipated to be significantly affected. Credit: Mr.Boyz/Shutterstock. US President Donald Trump has stated that the country is set to announce “major tariffs” on pharmaceutical imports soon, as reported by Reuters . According to the President, the move will incentivise drug companies to relocate their operations to the US. The announcement is expected as the “discounted” reciprocal tariffs, previously declared, are due to take effect from 9 April 2025, as reported in the Business Standard . Despite not naming specific countries, it is anticipated that India and China, the two principal suppliers of generic drugs to the US market, are expected to be significantly affected. Trump also stated that the new tariffs would result in drug companies swiftly returning to the US due to its substantial market share. He noted that the companies would depart from other regions, including China, once the tariffs are in place. Following the imposition of an additional 50% tariff on China, which was requested to lower its retaliatory tariff of 34% but did not do so, China’s total tariffs now stand at 104%. Trump has consistently championed the cause of increasing domestic pharmaceutical production and previously vowed to implement tariffs to bolster the country’s manufacturing capacity. Although he alluded to the announcement of tariffs on pharmaceutical imports on 24 March 2025, he did not provide a specific timeline. According to The Times of India, Indian pharmaceutical stocks have taken a hit in response to the tariff threats, with the Nifty Pharma index falling by 1.7%, contributing to a broader decline in the Nifty 50 benchmark. Lupin, Gland Pharma and Zydus Lifesciences saw significant losses, with shares dropping between 3% and 5%. Sun Pharma and Cipla also experienced declines.