4 months ago
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In September 2025, U.S. President Donald Trump’s sweeping announcement imposing a 100% tariff connected branded and patented pharmaceutical imports from October 1, 2025, saw India’s pharmaceutical industry, which has agelong been hailed arsenic the “pharmacy of the world”, lasting astatine a crossroads. The U.S.’s move, ostensibly aimed astatine bolstering home manufacturing, threatens to disrupt proviso chains that person saved the U.S. health-care strategy billions of dollars portion besides fuelling India’s export-led growth.
Yet, arsenic tariffs ripple done planetary markets, India’s dominance successful generics offers a captious buffer, adjacent arsenic it underscores the urgent request for diversified partnerships and home reforms. With pharma exports to the U.S. unsocial reaching adjacent to $9 cardinal successful fiscal 2025 — a 14.29% surge year-on-year — the stakes could not beryllium higher for India’s $50 cardinal pharmaceutical sector, which contributes astir 1.72% to the nation’s GDP.
A planetary perspective
Global pharmaceutical exports, valued astatine implicit $850 cardinal successful 2024, thrive connected aging populations, chronic diseases, and post-COVID-19 pandemic innovation. Germany ($119.85 billion), Switzerland ($99.08 billion), and the U.S. ($90.30 billion) were pb exporters successful 2023-24, portion the U.S. ($212.67 cardinal successful imports successful 2024), Switzerland, Germany, Belgium, and China apical importers. The European Union (EU)’s €313.4 cardinal successful medicinal exports successful 2024, up 13.5%, reflects resilience amid geopolitical tensions. India, the third-largest exporter by volume, shipped $27 cardinal successful 2023, rising to $30.47 cardinal successful FY25.
Generics dominate, with 70% of exports to the U.S. and Europe. However, $5 cardinal successful yearly imports, chiefly progressive pharmaceutical ingredients (API) from China (72% share), exposes proviso concatenation risks. The sector’s 10%-12% CAGR adds 0.5%-1% to GDP maturation annually, bolstering forex reserves. The U.S. tariff, which has spared generics for now, targets branded drugs unless made domestically. India supplies 40% of U.S. generics, redeeming payers $219 cardinal successful 2022. Yet, the marketplace jitters were contiguous with the shares of pharma majors falling and erasing millions successful marketplace cap. An escalation to generics could chopped export revenues by 10%-15%, trimming GDP maturation by 0.2%-0.3% successful FY26. Some firms with implicit 30% U.S. exposure, look rerouting costs, regulatory hurdles, API ostentation (up 5%-7%), and stalled probe and development. This could spur “China-plus-one” strategies, redirecting exports to Africa and Southeast Asia, perchance raising India’s regulated marketplace stock from 3% to 3.5% by 2030.
India’s Goods and Services Tax (GST) rationalisation, effectual September 22, 2025, provides home ballast. Drug and medicine rates dropped from 12% to 5%, with 36 indispensable items astatine nil, redeeming consumers $1.2 cardinal annually. Medical instrumentality rates fell from 18% to 5%, easing $5 cardinal successful imports. No re-labelling for pre-September stocks minimises disruptions. Aligned with Ayushman Bharat, this boosts depletion by 8%-10%, insulating markets from tariff-driven hikes.
On eastbound scale
Global commercialized pits occidental innovation against eastbound scale. Under the U.S.-EU pact, EU exports of medicinal and pharmaceutical products to the U.S. ($65.7 cardinal from Ireland successful 2024), prioritises proviso concatenation security. China’s 2025 agreements, capturing 32% of Q1 planetary biotech deals, and $2.5 cardinal successful U.S. molecule licensing successful H1 2025, awesome eastbound strength. India’s diplomacy has seen the signing of six memoranda of knowing (MoU) with Trinidad and Tobago successful July 2025 (it includes practice successful pharmaceuticals), a Singapore API pact, and Serum Institute’s dengue attraction collaboration for low-middle-income nations. These, alongside iPHEX (the planetary pharmaceutical exhibition) could treble exports to Africa significantly. With 35% of pharmaceutical exports U.S.-bound, eastbound alliances could offset 20%-25% of tariff risks.
Bullish forecasts
Forecasts overgarment a bullish canvas: India’s pharma market, valued astatine $50 cardinal successful 2023-24, has a extremity of reaching $130 cardinal by 2030 (11%-12% CAGR), with exports surging to $120-$130 billion. Globally, spending could deed $1.5 trillion by 2029, fuelled by biosimilars and precision medicine. India’s API assemblage could turn to ₹1.82 trillion by 2030 ($22 billion), with PLI schemes reclaiming 20% home production.
Challenges specified arsenic IP disputes and API dependency persist, but resilience shines done initiatives specified arsenic Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP). Under the PMBJP, a full of 16,912 Jan Aushadhi Kendras person been opened (June 2025), with 2,110 medicines and 315 surgicals, aesculapian consumables and devices nether the strategy merchandise basket.
Tariffs endanger affordability, with U.S. crab therapy costs perchance rising $8,000-$10,000 for a 24-week course, mirroring India’s 60% out-of-pocket burden. Generics, 80% cheaper, alteration 20 cardinal treatments yearly, though prime concerns and disruptions hazard delaying surgeries by 15%-20%. PMBJP’s oncology basket, cutting costs by 70%, proves that home buffers work.
U.S. tariffs hazard causing shortages if India’s 40% generic proviso frays. India indispensable leverage MoUs, put $10 cardinal successful APIs via PLI 2.0, and propulsion WTO reforms. With planetary pharma eyeing $450 cardinal for India by 2047, collaboration successful the signifier of east-west hybrids, innovation, and equitable entree is key. Policymakers indispensable diversify boldly, betterment swiftly, and unafraid India’s pharma supremacy.
R.H. Pavithra is Professor, Department of Studies and Research successful Economics, Karnataka State Open University, Mysuru, Karnataka
