India's CDMO firms to benefit from US duty exemption on speciality pharmaceuticals
Early this year, the US government had announced 100% duty on a wide range of patented medicines and its raw materials imported to encourage domestic manufacturing of critical drugs in that country.
The Trump Administration’s decision to exempt a set of patented speciality pharmaceutical products and ingredients imported from India and 19 other countries from duties underscores the vital role Indian Contract Development and Manufacturing Organisations (CDMO) play in the supply of innovative medicines in the US.
Early this year, the US government had announced 100% duty on a wide range of patented medicines and its raw materials imported to encourage domestic manufacturing of critical drugs in that country. The levy became applicable to patented pharma imports done by some companies from July 31. The current exemption list has come a day before the additional levy gets enforced on more manufacturers from September 29 onwards.
The set of exempted products include medicines for rare diseases, fertility treatments, advanced cell and gene therapies, anti-body drug conjugates and veterinary drugs.
India’s major players in the CDMO segment include Divis Laboratories, Syngene International, Aurigene Pharmaceuticals, Laurus Labs, Piramal Pharma etc, some of which, wholly-owned subsidiaries of the country’s leading biotech and pharmaceutical companies. Domestic pharma majors like Sun Pharma and Lupin Ltd also have dedicated CDMO verticals to serve global pharma MNCs.
In addition to India, European Union and countries like Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, Guatemala, Indonesia, Japan, Jordan, Malaysia, South Korea, Switzerland, Liechtenstein, Taiwan, Thailand, UK, and Vietnam are also regions from where these products can be imported to the US duty-free.
On April 2, US President issued Proclamation 11020 “Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States”, which called for a 100% ad valorem tariff on certain imports of patented pharmaceuticals and associated pharmaceutical ingredients, effective July 31, 2026 for a set of companies, and September 29, 2026 for all other companies. It also said that different rates apply to patented pharmaceutical products and associated ingredients from certain jurisdictions and from companies with ‘onshoring agreements’ approved by the US Department of Commerce.
The April 2 Proclamation had also stated that pharmaceutical tariffs do not apply to generic pharmaceutical products and associated ingredients and an ad valorem tariff rate of zero duty will apply for pharmaceuticals and associated ingredients that are designated as orphan drugs, nuclear medicines, plasma derived therapies, fertility drugs, cell therapy product, gene therapy product, antibody drug conjugates, medical countermeasures related to chemical, biological, radiological, and nuclear threats etc.