As the Trump administration announces a 100% tariff on any branded or patented pharma products from October 1, 2025, the Indian pharmaceutical sector is bracing for significant changes, though it can navigate these challenges by focusing on market diversification, according to an analysis by GlobalData.

While the immediate impact on India's core generic drug export business may be limited, as most generics are not directly targeted by these tariffs, significant risks remain, says Ramnivas Mundada, Director of Economic Research and Companies at GlobalData. “If the US expands tariffs to encompass generic medicines in the future, it will directly affect India's primary export category. Furthermore, Indian generic manufacturers, operating on thin profit margins, could find the US market financially unviable if tariffs expand, potentially leading to reduced supply of affordable medicines.”

Notably, the US has emerged as the leading destination for Indian pharmaceutical exports, accounting for 34.5% of the total in the fiscal year 2024-25. India's pharmaceutical exports to the US surged by 20.4%, reaching $10.5 billion, while overall exports rose by 9.4% to $30.5 billion during the same period, as reported by the Pharmaceutical Exports Promotion Council of India.

While the US tariff announcement introduces uncertainty for India's pharmaceutical sector, proactive strategic responses can help mitigate risks and reinforce the industry's global standing, the analysis suggests.

“However, the impending tariffs have already triggered a negative reaction in the Indian stock markets, with the Nifty Pharma index experiencing a notable decline. Major players in the sector, including Sun Pharma, Dr. Reddy's Laboratories, and Lupin, have also seen their share prices drop,” says Mundada.

How India can navigate this challenge

As per Mundada, India has several strategic options, including market diversification into regions such as Europe, Latin America, and emerging economies. This, he said, will reduce reliance on the US market. “Additionally, a shift towards high-value products, including complex generics and biosimilars, could enhance profit margins and provide a buffer against competitive pressures.”

Also, the Indian government can bolster domestic manufacturing through Production-Linked Incentive (PLI) schemes, reducing dependence on imports for active pharmaceutical ingredients (APIs) and reinforcing India's position as a self-reliant pharmaceutical hub, he said. “Diplomatic engagement with the US to advocate against protectionist measures will be essential in highlighting India's role in providing affordable medicines.”

As the fiscal year 2026 unfolds, the economic impact of these tariffs is expected to be mixed but manageable, observes Mundada. “While companies reliant on the US for branded drug exports may face immediate revenue challenges, the resilience of the generic segment is expected to mitigate a catastrophic decline. India's diversified economy and robust domestic demand are anticipated to absorb much of the shock, although a potential depreciation of the Indian rupee could occur if pharmaceutical exports decline significantly.”