Donald Trump’s proposal to impose a 25% or more tariff on pharmaceutical imports into the United States holds significant implications for Indian drug makers, who play a pivotal role in the US generic drug market.
This tariff, if implemented, would directly affect the cost structure and profitability of Indian pharmaceutical companies, given that the US is one of the largest markets for their products.
Indian pharmaceutical companies have a substantial revenue stream from the US, which is often the largest single market for their exports. According to recent data, the US accounted for about 31% of India’s pharmaceutical exports in fiscal year 2024, translating to billions in revenue. Companies like Sun Pharma, Dr Reddy’s, Cipla, and Aurobindo Pharma have significant exposure to the US market, with percentages of their total revenue coming from there ranging from 30% to over 45%.
As per a Reuters report, in 2022, nearly half of all generic prescriptions filled in the US were supplied by Indian pharmaceutical companies, generating $408 billion in savings for the US healthcare system, according to research firm IQVIA.
Major Indian drugmakers with high US exposure
Sun Pharmaceutical
India’s largest drugmaker derived 32% of its total revenue from the US market in fiscal 2024. Managing Director Dilip Shanghvi stated earlier this week that if the proposed tariffs are imposed, the additional costs will be passed on to consumers. The company exports to over 100 countries, with overseas sales accounting for 72.7% of total revenue.
Dr Reddy’s Laboratories
North America represents the largest market for Dr. Reddy’s, contributing 47% of total sales in fiscal 2024. The company relies on its key generic drugs in oncology and immunology therapies, which saw a 28% increase in sales year-over-year. Dr Reddy’s is also investing in upcoming generic weight-loss drugs to drive future growth in the US
Cipla
As India’s third-largest drugmaker by revenue, Cipla generated 30% of its total revenue from North America in fiscal 2024. It ranks among the top 15 prescription drug providers in the US, offering generic respiratory and oncology medications.
Biocon
With 44% of its total revenue coming from the US market in fiscal 2024, Biocon primarily thrives on biosimilar drugs used for treating conditions like rheumatoid arthritis and cancer. Indian companies collectively supplied 15% of the biosimilars used in the US in 2022, according to IQVIA.
Lupin
Lupin’s North American sales accounted for 37% of its overall revenue in fiscal 2024, marking a 30% increase from the previous year. The company attributes this growth to strong demand for its respiratory and antiretroviral generic drugs.
Glenmark Pharma
Glenmark generated 26% of its total revenue from North America in fiscal 2024. The company is prioritizing the expansion of its respiratory drug portfolio.
Zydus
The US is Zydus’ largest market, contributing 46% of its total revenue in 2024. The company has a broad portfolio, distributing over 200 generic products in the US.
Potential Impact of Tariffs
The proposed tariffs could increase costs for Indian drugmakers, potentially reducing their competitiveness in the US market. The impact may lead to higher drug prices for American consumers if companies pass on the additional costs. Industry experts warn that such tariffs could disrupt the global supply chain, affecting both affordability and availability of essential medicines in the US.
While the full ramifications remain uncertain, Indian pharmaceutical firms are closely monitoring the situation and evaluating strategies to mitigate potential losses.
(With inputs from agencies)
