In a move that could reshape global pharmaceutical trade, the U.S. government has announced a 100% tariff on imported branded and patented drugs, effective October 1, 2025. The announcement came on September 25, 2025, triggering a sharp reaction in Indian pharmaceutical markets.
Impact on Indian Exports
India exports over $8.5 billion worth of pharmaceutical products to the U.S. annually, with generics accounting for 80% of total exports. While the new tariff specifically targets branded drugs, industry analysts warn that the announcement has already spooked investors.
“The immediate impact is limited because generics are exempt,” said Ramesh Nair, an industry analyst. “But companies with a significant portfolio in branded drugs may face higher costs and potential loss of market share.”
Market Reaction
Following the announcement, the Nifty Pharma index fell by 2.6%, with Sun Pharma and Natco Pharma among the most affected. Stocks representing companies heavily invested in branded medicines saw the sharpest declines.
Graph 1 Idea: Line graph showing Nifty Pharma index dropping from 18,476 on Sept 25 to 17,992 on Sept 26.
Industry Response
Indian pharma companies are exploring multiple strategies:
Expanding generic drug production to offset tariff impact.
Investing in U.S. manufacturing facilities to qualify for tariff exemptions.
Diversifying export markets to reduce dependence on the U.S.
Government Monitoring
The Indian government is closely watching developments. Officials are evaluating trade negotiations and possible exemptions to safeguard the interests of domestic pharmaceutical companies.
Outlook
Experts believe the tariff could reshape investment strategies, particularly in the branded drug segment. While generics continue to dominate exports, companies are urged to adapt quickly to protect revenue streams and investor confidence.
“Strategic diversification and local manufacturing in the U.S. will be key in the coming months,” said Neha Kapoor, trade analyst.
Stay tuned to Industrial Front for live updates on the tariff’s impact and sector-specific stock movements.