|
India Supplies 40% of U.S. Generics; Tariff Extension Risk to Hit Revenues
In September 2025, the U.S. announces a 100% tariff on branded and patented pharmaceutical imports, effective October 1, 2025. The development is relevant due to India’s high export exposure to the U.S. pharmaceutical market and the stated risk that tariff coverage could extend to generics.
India-U.S. Pharma Tariff (September-October 2025)
| Dimension | Key Details |
|---|---|
| Current trigger (U.S. tariff) | U.S. announces a 100% tariff on branded and patented pharmaceutical imports; provides for effectiveness from October 1, 2025. |
| India pharma sector size and GDP share | India’s pharmaceutical industry is valued at $50 billion and comprises 1.72% of national GDP. |
| India export ranking | India is ranked as the 3rd largest exporter by volume. |
| India pharma exports | Pharma exports shipped $27 billion in 2023 and rose to $30.47 billion in FY25. |
| Sector growth and GDP contribution | The sector’s 10%-12% CAGR adds 0.5%-1% to GDP growth annually and bolsters forex reserves. |
| Generics share in exports to U.S. and Europe | Generics account for 70% of exports to the U.S. and Europe. |
| India exports to the U.S. (FY25) | Exports to the U.S. reached $9 billion in FY25, comprising a 14.29% year-on-year surge. |
| India’s share in U.S. generics supply | India supplies 40% of U.S. generics. |
| API import vulnerability | India imports $5 billion worth of active pharmaceutical ingredients (APIs), mainly from China (72% share). |
| GST rationalisation | GST rationalisation (September 22, 2025), aligned with Ayushman Bharat, provides for reduced drug/device costs and boosts consumption by 8%-10%. |
| Pharma diplomacy | Provides for 6 MoUs signed with Trinidad & Tobago (July 2025), a Singapore API pact, and expanded Serum Institute collaboration in low‑middle‑income nations. |
| Trade promotion (iPHEX) | iPHEX (international pharmaceutical exhibition) provides for the possibility of doubling exports to Africa. |
| Tariff scope | U.S. tariff shock (2025) targeted branded drugs unless made domestically. |
| Stated risk if tariff extends to generics | If extended to generics, export revenues could cut by 10%-15% and GDP growth could trim by 0.2%-0.3% in FY26. |
| Firm-level risks | Some firms with over 30% U.S. exposure face rerouting costs, regulatory hurdles, API inflation (up 5%-7%), and stalled research and development. |
| Global pharma exports (2024) | Global pharmaceutical exports in 2024 are valued at over $850 billion. |
| Top exporters (2023-24) | Germany ($119.85 billion), Switzerland ($99.08 billion), and the U.S. ($90.30 billion). |
| Top importers (2024) | U.S. ($212.67 billion), Switzerland, Germany, Belgium, and China. |
| Export exposure | 35% of pharmaceutical exports are U.S. bound. |