US imposes 100% tariff on patented drug imports; India impact limited

The Donald Trump administration has introduced a new tariff regime on pharmaceutical imports, imposing duties of up to 100% on patented medicines. 

The move is aimed at pushing global drugmakers to shift production to the US, but its impact on India is expected to be moderate due to key exemptions, according to a report by Reuters.

Immediate effects on India pharms to be limited

The 100% tariff will apply mainly to patented drugs manufactured in countries that do not have trade agreements with the US and to companies that have not signed most-favoured-nation (MFN) pricing deals with Washington. Since India is a major exporter of generic medicines rather than patented drugs, the immediate effect on its pharma shipments is likely to remain limited.

According to the White House statement, the policy will be implemented in phases. Larger pharmaceutical companies will face the new duties after 120 days, while smaller firms will get a longer transition period of 180 days.

For trade patterns tariffs are only at 15%

For countries that have reached trade agreements with the US, tariff rates will be capped at 15%. The United Kingdom has negotiated a lower rate of 10%, with a provision for zero tariffs if it meets further commitments on domestic manufacturing.

The US has also offered concessions to companies that agree to invest in local production. Firms that commit to manufacturing in the US will face a reduced tariff of 20%, while those entering MFN pricing agreements will be fully exempt from import duties until January 2029.

A significant number of large global drugmakers have already secured relief by entering such agreements. This means the higher tariffs are likely to affect smaller pharmaceutical companies and suppliers of active ingredients more than industry leaders.

Exemption of generic medicines is a key relief for India

For India, the exemption of generic medicines is a key relief, as these account for a large share of its exports to the US. However, there are concerns that the US may review this exemption within a year, which could create uncertainty for Indian manufacturers in the future.

Industry experts say the move could disrupt global supply chains and increase compliance costs. While the immediate impact on Indian exporters may be contained, any future expansion of tariffs to generics could pose a challenge for the country’s pharmaceutical sector, which relies heavily on the US market.