CAN AN U.S. PRESIDENT Donald Trump replicate his ‘tariff success’ against patented drugmakers in the generic (off-patent) pharma sector? That’s the question the world is asking after Trump’s two-year deadline for generic drug companies to set up production facilities in the U.S., warning that imports of off-patent medicines would face a 100% tariff from August 2028, rising to 200% a year later, if they failed to comply.

Trump’s first similar announcement came on April 2 when he targeted global pharma giants that manufacture and market innovative, patented medicines — a segment that accounts for nearly 87% of the U.S. market by value. The administration slapped 100% ad valorem duty on the import of patented medicines, unless the companies come up with a plan to manufacture the products in the U.S. within a specific period of time. Depending on the plans, the additional tariff could be 20% till April 2, 2030, and 100% thereafter.

The impact was soon evident.

According to the White House, the ‘Trump effect’ prompted investment commitments to the tune of $480 billion from pharma giants, mostly U.S.-based, to expand their innovative medicine development and manufacturing capacities. That success, perhaps, prompted Trump to say that next he wants to “re-shore generic pharmaceutical production into America”, warning that companies failing to ready “plant and equipment” in the U.S. within the next two years would face penalties.

The latest move, however, primarily targets Indian drug makers, who supply about 47% of all generic prescriptions dispensed in the U.S. The stakes are high for the Indian pharma industry, notes Delhi-based think tank Global Trade Research Initiative (GTRI), as the U.S. is the largest export market for medicines, with exports worth $9.7 billion, accounting for more than a third of India’s total global drug exports of $25.8 billion in 2025.

Even as U.S. Secretary of State Marco Rubio acknowledges that India is likely to have concerns about Trump’s tariff proposal, the Indian Pharmaceutical Alliance has responded cautiously. It said it will continue to engage with the U.S. to build a stronger partnership and strengthen health and medicine security in both countries.

What is certain, however, is that the response from generic drug manufacturers is unlikely to be as swift or as substantial as that of global innovators. The logic is simple: for multinationals selling patented products in the U.S., the profit margins and commercial stakes are very high. For generic drugmakers, operating on wafer-thin margins, it is not.

“Building a pharmaceutical manufacturing ecosystem takes at least 5-7 years. The U.S. would need to have at least 1,000 manufacturing units more to produce the generic formulations (final medicines) currently prescribed there. Even then, manufacturers will still have to source the active pharmaceutical ingredients (APIs) or raw materials from outside,” says Namit Joshi, chairman, Pharmaceuticals Export Promotion Council (Pharmexcil). Developing a self-sufficient ecosystem requires investment across both APIs and finished formulations. “Why would companies make those investments when generics is fundamentally a low-value, low-margin business?” he asks. “Either someone within the U.S. healthcare system absorbs the additional costs, or companies decide they cannot supply at this rate. Either way, American patients will end up paying more,” he adds.

The two-year window suggests that the U.S. recognises the complexity of relocation. While some industry observers see the new tariffs as a bargaining tool to get India to concede to the U.S. demands in the ongoing FTA talks, others say that rather than worrying about Trump’s tariff threat, which is two years away, India should focus on strengthening domestic manufacturing and diversifying the export market.

“About 70% of the chemical-based APIs used by Indian drugmakers and nearly 90% of biologic inputs come from China. If Beijing were to restrict API exports while expanding sales of higher-value finished medicines, India’s drug industry could face serious supply disruptions,” warns Ajay Srivastava, founder of GTRI. Instead, India should make rebuilding its API manufacturing base a national priority. “Indian pharmaceutical companies should also reduce their dependence on the U.S. market by expanding exports to Europe, Latin America, Africa and Asia,” he says.