Is generic pharma insulated from Trump’s tantrums?

/4 min read

ADVERTISEMENT

The 17 global pharmaceutical innovative firms have been told by Trump to either step up in their efforts to lower prescription drug prices in the U.S., or face the wrath of the federal government, which will deploy every tool in its arsenal, ‘to protect American families from continued abusive drug pricing practices.’
Is generic pharma insulated from Trump’s tantrums?
India exported $12.7 billion worth of pharmaceuticals in 2024 to the U.S., a market that accounts for 54.5% of India’s global drug exports. 

On July 31, U.S. President Donald Trump wrote to 17 global pharmaceutical companies, outlining the steps they must take to lower prescription drug prices in the United States. They were asked to match the lowest price offered by them in other developed nations and respond with binding commitments to bring down the prices of their medicines sold in the U.S. by September 29 or face the consequences.

The same day, Trump exempted generic pharmaceutical products and raw materials from a 25% tariff he slapped on the goods exported from India to the U.S. (and tariffs of varying percentages on dozens of other countries too) as a ‘reciprocal tariff’ to balance the ‘trade deficit’ the U.S. has with its trading partners. Six days later, on August 6, Trump announced an additional 25% tariff on Indian exports to the U.S. as ‘punishment’ for continuing to purchase crude oil from Russia against Trump’s diktat. Here again, generic pharmaceutical products—one of the top categories of goods exported from India to the U.S.—got exempted.

Fortune India Latest Edition is Out Now!
India's Top 100 Billionaires

August 2025

As India continues to be the world’s fastest-growing major economy, Fortune India presents its special issue on the nation’s Top 100 Billionaires. Curated in partnership with Waterfield Advisors, this year’s list reflects a slight decline in the number of dollar billionaires—from 185 to 182—even as the entry threshold for the Top 100 rose to ₹24,283 crore, up from ₹22,739 crore last year. From stalwarts like Mukesh Ambani, Gautam Adani, and the Mistry family, who continue to lead the list, to major gainers such as Sunil Mittal and Kumar Mangalam Birla, the issue goes beyond the numbers to explore the resilience, ambition, and strategic foresight that define India’s wealth creators. Read their compelling stories in the latest issue of Fortune India. On stands now.

Read Now

Both decisions—the one that is troublesome for global pharma giants and the other that exempts generic pharmaceutical producers across the globe from additional tariffs—are based on the same logic of ensuring affordable medicines to the U.S. consumer.

Will it work? What will be the impact of Trump’s affordability drive on companies that make innovative drugs, and the ones that make low-cost generic medicines? How will it impact consumers not just in the U.S., but also outside the U.S.?

While Indian exporters catering to most other sectors have been left to wonder how to stay put in the U.S. market with a cumulative 50% tariff burden, which is much higher than most of their competitors, it has been business as usual for domestic Indian pharmaceutical exporters. India exported $12.7 billion worth of pharmaceuticals in 2024 to the U.S., a market that accounts for 54.5% of India’s global drug exports.

With a 5.98% market share, India is the fourth-largest pharmaceutical supplier to the U.S., behind Ireland, Switzerland, and Germany, says Delhi-based think tank Global Trade Research Initiative. Any additional tariffs levied by Trump on generic medicine imports from select countries can alter these market dynamics. That has not happened so far.

On the other hand, the innovator firms that received Trump’s missives are required to recalibrate their plans for the U.S. market. The 17 global drug firms—AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, EMD Serono, Genentech, Gilead, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron, and Sanofi—have been told that if they “refuse to step up,” the federal government will deploy every tool in its arsenal ‘to protect American families from continued abusive drug pricing practices’. Some companies, such as AstraZeneca and GSK, are known to have initiated discussions in this direction.

The current action could be centred on global pharma majors, but that doesn’t mean generic companies are not under the scanner.

“Generic medicines are important for affordable healthcare in the U.S. and typically operate on razor-thin margins. Ensuring their consistent availability is critical for patient care. India–U.S. partnership is key to securing API supply chains and enhancing healthcare resilience”, says Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance (IPA), the association of 23 leading Indian drug manufacturers who account for 80% of India’s medicine exports.

However, it is too early for generic drug manufacturers to feel comfortable. The ‘exemption’ granted by Trump is subject to the findings of an ongoing investigation carried out by the U.S. government to determine the effects on the national security of imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, critical inputs such as active pharmaceutical ingredients, and key starting materials, etc.

The investigation is meant to understand the current and projected demand for pharmaceuticals and pharmaceutical ingredients in the United States; the extent to which domestic production of pharmaceuticals and pharmaceutical ingredients can meet domestic demand, and the role of foreign supply chains, particularly of major exporters, in meeting United States demand for pharmaceuticals and pharmaceutical ingredients.

It will also look if there is any concentration of United States imports of pharmaceuticals and pharmaceutical ingredients from a small number of suppliers and the associated risks, the impact of foreign government subsidies and predatory trade practices on United States pharmaceuticals industry competitiveness and the economic impact of artificially suppressed prices of pharmaceuticals and pharmaceutical ingredients due to foreign unfair trade practices and state-sponsored overproduction.

The feasibility of increasing domestic capacity for pharmaceuticals and pharmaceutical ingredients to reduce import reliance is being looked at. The impact of current trade policies on domestic production of pharmaceuticals and pharmaceutical ingredients, and whether additional measures, including tariffs or quotas, are necessary, is also being studied.

Trump’s plan is clear. He is beginning with Big Pharma but is not ending with them. Any measure by Trump to reduce import dependence on such critical products will impact the generic pharmaceutical industry in the medium to long term.

It is time for Indian generic pharmaceutical exporters to review their U.S. plans, too.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.

Related Tags