Trump’s 100% Tariff on Branded Drugs Threatens India’s Pharma Sector

(WASHINGTON / NEW DELHI) President Trump said Thursday he will impose a 100% tariff on imported branded and patented pharmaceutical drugs starting October 1, 2025, unless manufacturers are actively building production facilities in the United States. The move, announced on Truth Social, puts drugmakers on notice to shift more production to U.S. soil or face steep cost increases on shipments into the American market. It also raises immediate questions for the Indian pharmaceutical sector, which relies on the U.S. as its biggest buyer, even though most of India’s sales are lower-cost generics that are not directly named in the new measure.

Under the plan, the 100% tariff would apply to “any branded or patented pharmaceutical product” that enters the United States, with an exemption for companies that are “building” plants domestically. The post defines “building” as having broken ground or being under construction. In parallel, the White House signaled broader trade pressure across other consumer and industrial goods, with a 50% tariff on kitchen cabinets and vanity units, 30% on upholstered furniture, and 25% on heavy trucks and parts.

India’s drugmakers are watching closely. In FY 2024, India exported $27.9 billion of pharmaceutical products worldwide, with about 31% (≈ $8.7 billion) destined for the U.S. market. Indian manufacturers supply roughly 45% of generic drugs and 15% of biosimilars used in the U.S., according to industry data. Because the new action is framed as a tariff on branded drugs and patented products, not generics, Indian executives and investors are trying to gauge whether the immediate fallout will be limited—or whether the scope could broaden to include complex generics or specialty products down the line.

Policy details and immediate scope

The tariff on branded drugs takes effect on October 1 unless companies meet the “building in America” standard. That definition—“breaking ground” or “under construction”—gives some flexibility to firms that are mid-project but not yet producing at scale.

Multinational companies with large branded portfolios will likely bear the brunt, while most Indian pharma exports to the U.S. are generics priced far below branded equivalents and therefore, at least for now, appear outside the direct target of this move.

Indian markets reacted quickly. Pharma stocks fell as traders priced in headline risk and the chance of policy creep. Analysts said the short-term hit to Indian exporters should be modest because generics don’t fall under the tariff on branded drugs. Still, they warned that any later extension covering complex generics—copycat versions of hard-to-make products—could alter that picture, especially for firms with niche portfolios that carry brand names in the U.S. even if they are not patented.

The Indian Pharmaceutical Alliance, representing major domestic companies, said the action “will not impact generic medicines” based on the language released so far. That stance gave some relief to exporters of off-patent products. But legal and trade teams are parsing how customs officials will interpret terms such as “branded,” “patented,” and “under construction,” and how they will verify a manufacturer’s U.S. build status at ports of entry.

India linkages and potential workarounds

Several leading Indian drugmakers already run plants in the U.S., including facilities focused on sterile injectables, oral solids, and limited branded product lines. Those operations, and any projects that have broken ground, could qualify for an exemption if the final rules mirror the Truth Social language.

For companies that mainly export generics from India, the impact would hinge on whether the administration later widens the tariff net to include:

• Complex generics
• Biosimilars
• Active pharmaceutical ingredients (APIs)

As written, APIs are not listed, but supply-chain managers are stress-testing scenarios in case future actions reach further upstream.

Industry strategists outlined a few near-term responses:

1. Document U.S. construction timelines and contracts to support exemption claims.
2. Reassess which products are classified as “branded” in the U.S. market, even if off-patent.
3. Consider accelerating U.S. fill-finish or packaging work that could strengthen arguments for domestic production steps.
4. Prepare pricing and contracting plans in case import costs for branded items double under the 100% tariff.

For U.S. patients and insurers, the tariff could add pressure to drug prices for on-patent medicines. Branded drugs already account for a large share of spending despite lower prescription volumes compared with generics. If imports face a surcharge and companies cannot offset costs through domestic production, higher list prices, tighter formularies, or delayed launches could follow. State Medicaid programs and Medicare Part D plans would also face budget strain if net prices climb.

According to analysis by VisaVerge.com, the price impact will depend on:

• How many firms qualify for exemptions
• How distributors adjust margins
• Whether insurers can negotiate rebates that blunt the shock

Trade and regulatory questions ahead

Five open questions will shape outcomes over the next several weeks:

1. Will the tariff remain limited to branded and patented drugs, or will rules expand to complex generics and biosimilars?
2. How will customs verify a company’s “building” status, and what documents will count as proof?
3. What grace periods or grandfathering, if any, apply to shipments already contracted for delivery after October 1?
4. How will India respond through diplomatic channels or trade forums, and will there be targeted countermeasures?
5. Could supply chains shift meaningfully toward local U.S. manufacturing, or will firms choose to pay and pass on some of the cost?

Trade lawyers say definitions will be crucial. U.S. officials could anchor enforcement to customs classification codes and product labeling, but many drugs carry both a generic name and a brand name. If classification turns on patent status, disputes may center on whether secondary patents—such as on delivery devices or formulations—bring a product into the tariff zone.

Companies can review classification guidance and tariff headings through the U.S. International Trade Commission’s Harmonized Tariff Schedule:
https://hts.usitc.gov/
This is the baseline for import duties and product categories.

On the Indian side, policymakers must weigh whether to challenge the decision at the World Trade Organization or try to reach a bilateral understanding that preserves access for critical medicines. New Delhi may also work with Indian firms on incentives for U.S.-based manufacturing partnerships, joint ventures, or contract sites that meet the “under construction” test before October 1. Privately, executives say time is tight for greenfield projects, so expansions at existing U.S. sites could be the fastest path to exemption.

Possible scenarios and stakeholder reactions

Investors are modeling two paths:

• Benign case: The tariff hits a narrow set of high-profile branded imports made outside the U.S., while generics remain untouched and branded manufacturers with active U.S. builds are exempt.
• Adverse case: The scope widens to complex generics and biosimilars, pulling more Indian exports into the net and raising costs across the supply chain.

For now, the first scenario looks more likely based on the text of the announcement, but the second cannot be ruled out until final guidance is published.

Healthcare groups in the U.S. are preparing to press for clarity. Patient advocates worry about access to specialty drugs if supply lines shift or if prices rise sharply after October 1. Hospital systems are concerned about contract stability for branded injectables used in oncology and critical care, some of which are produced abroad under tight quality controls. Pharmacy benefit managers will push manufacturers to absorb part of the cost or accelerate U.S. production to avoid passing increases to plan sponsors and patients.

From a compliance standpoint, companies should prepare a practical file for U.S. customs review that includes:

• Evidence of U.S. construction activity (permits, ground-breaking photos, contracts)
• Product lists showing patent status and labeling to distinguish branded versus unbranded versions
• Country-of-origin documents for each batch and any U.S. value-added steps like fill-finish

Market watchers note that India’s role as the world’s largest supplier of generics remains intact. Even if branded imports face a 100% tariff, the bulk of India’s U.S.-bound shipments are off-patent, low-cost medicines that underpin American pharmacy counters. If policymakers keep generics out of scope, the immediate shock to Indian exporters should be limited. Still, the headline risk alone could affect financing costs for expansion and prompt firms to diversify their production footprints to reduce future exposure.

Patient and diplomatic implications

For families on maintenance therapies in the U.S., the clearest risk is higher out-of-pocket costs for brand-name drugs if wholesalers and insurers cannot absorb the surcharge. Patients may see stricter prior-authorization rules or step therapy requirements as plans try to steer use toward lower-cost generics. If a branded product has no generic equivalent, costs are harder to avoid. That is why the definition of covered products—and the breadth of any exemptions—will matter not just to companies, but also to patients who rely on steady access.

Diplomatically, Washington and New Delhi will likely seek channels to keep medicine flows stable. The two countries have deep ties in healthcare trade and research. Officials have often pointed to supply security as a shared goal after the pandemic revealed gaps in global sourcing. A measured rollout with clear rules could limit disruption while still pushing manufacturers to expand U.S. capacity, which appears to be the policy aim.

Immediate actions for companies

The coming weeks will bring more detail. Companies with any exposure to branded imports should act now:

• Confirm which SKUs could be flagged as branded or patented.
• Gather construction proof for U.S. projects (permits, photos, contracts).
• Prepare pricing models assuming the tariff applies on October 1.
• Generics-focused exporters should monitor for any sign of scope drift that could capture complex generics or biosimilars.

As VisaVerge.com reports, clarity on definitions and documentation standards will be the difference between a narrow, targeted tariff and a wider drag on cross-border medicine trade.