In September 2025, US President Donald Trump’s drastic announcement that he would impose 100% tariffs on imports of branded and patented medicines from October 1, 2025 introduced the Indian pharmaceutical business, lengthy hailed because the “pharmacy of the world,” to a crossroads. The U.S. measures, ostensibly aimed toward boosting home manufacturing, threaten to save lots of the U.S. well being system billions of {dollars} whereas disrupting provide chains which have fueled India’s export-led progress.
However as tariffs spill over into international markets, India’s dominance in generic medicine offers an vital cushion, even because it highlights the pressing want for numerous partnerships and home reforms. The stakes could not be increased for India’s $50 billion pharmaceutical sector, the place pharmaceutical exports to the US alone reached practically $9 billion in FY25, up 14.29% year-on-year, contributing practically 1.72% to the nation’s GDP.
international perspective
International pharmaceutical exports will attain greater than $850 billion in 2024, rising resulting from ageing populations, persistent illnesses, and post-COVID-19 pandemic innovation. The key exporting international locations in 2023-24 had been Germany ($119.85 billion), Switzerland ($99.08 billion), and the US ($90.3 billion), and the highest importers had been the US (import worth in 2024 of $212.67 billion), Switzerland, Germany, Belgium, and China. European Union (EU) pharmaceutical exports rose by 13.5% to €313.4 billion in 2024, reflecting resilience amid geopolitical tensions. India, the third largest exporter, had a cargo worth of $27 billion in 2023, rising to $30.47 billion in FY2025.
Generic medicine dominate the market, with 70% of exports going to the US and Europe. Nevertheless, $5 billion in annual imports, primarily from energetic pharmaceutical elements (APIs) from China (72% share), are at provide chain threat. The sector’s 10%-12% CAGR will increase GDP progress by 0.5%-1% yearly and will increase international alternate reserves. U.S. tariffs have to this point exempted generic medicine and focused branded medicine aside from these manufactured domestically. India provides 40% of US generic medicine, saving payers $219 billion in 2022. However market turmoil quickly started, with the pharmaceutical large’s inventory value falling and hundreds of thousands of {dollars} in market capitalization being worn out. The growth into generic medicine might cut back export income by 10-15%, pushing down GDP progress by 0.2-0.3% in FY2016. Some corporations with 30% or extra publicity to the U.S. face rerouting prices, regulatory hurdles, API inflation (up 5% to 7%), and R&D stagnation. This might facilitate a “China plus one” technique, redirecting exports to Africa and Southeast Asia, and rising India’s regulated market share from 3% to three.5% by 2030.
Rationalization of India’s Items and Providers Tax (GST) will come into impact on September 22, 2025 and can carry stability within the nation. Drug costs fell from 12% to five%, 36 important objects went to zero, and shoppers saved $1.2 billion yearly. The tax price on medical gear was lowered from 18% to five%, which eased imports by $5 billion. Pre-September stock won’t be relabeled, minimizing disruption. Together with Ayushman Bharat, this can improve consumption by 8% to 10% and shield the market from value hikes resulting from customs duties.
on the japanese scale
International commerce pits Western innovation towards Jap scale. Beneath the US-EU Settlement, EU pharmaceutical and medical exports to the US ($65.7 billion from Eire in 2024) prioritize provide chain security. China’s 2025 deal captures 32% of worldwide biotech offers within the first quarter and $2.5 billion in US molecular licenses within the first half of 2025, demonstrating the power of the East. By way of Indian diplomacy, six Memorandums of Understanding (MoU) had been signed with Trinidad and Tobago in July 2025 (together with cooperation within the pharmaceutical discipline), the Singapore API Settlement, and the Serum Institute’s cooperation on dengue therapy for low- and middle-income international locations. Along with iPHEX (Worldwide Pharmaceutical Exhibition), these have the potential to considerably double exports to Africa. Since 35% of pharmaceutical exports go to the US, the Jap Alliance might probably offset 20% to 25% of the tariff threat.
bullish prediction
Forecasts paint a bullish canvas: India’s pharmaceutical market, valued at $50 billion in 2023-24, is focused to achieve $130 billion by 2030 (CAGR of 11%-12%), with exports surging to $120-130 billion. International spending on biosimilars and precision medication might attain $1.5 trillion by 2029. India’s API sector might develop to 1.82 trillion rupees ($22 billion) by 2030, with PLI schemes capturing 20% of home manufacturing.
Whereas challenges resembling mental property disputes and dependence on APIs nonetheless exist, resilience shines by way of initiatives resembling Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBTC). A complete of 16,912 Jan Aushadhi Kendras have been opened underneath PMBJP (June 2025) and a pair of,110 medicines and 315 surgical procedures, medical consumables and gear are included within the product basket of the scheme.
Tariffs threaten affordability, with most cancers therapy prices within the US probably rising by $8,000 to $10,000 for a 24-week course, mirroring India’s 60% out-of-pocket prices. Generic medicine are 80% cheaper and permit for 20 million therapies a yr, however they run the danger of delays of 15% to twenty% resulting from high quality issues and interruptions. PMBJP’s oncology basket reduces prices by 70%, proving that home buffers are working.
If India’s provide of 40% of generic medicine is shaken, there’s a threat of shortages resulting from U.S. tariffs. India ought to leverage the MoU to take a position $10 billion in API by way of PLI 2.0 and advance WTO reforms. International pharmaceutical corporations purpose to take a position $450 billion in India by 2047, and cooperation within the type of East-West hybrid, innovation and equal entry can be key. Policymakers should diversify boldly and innovate rapidly to make sure India’s pharmaceutical supremacy.
RH Pavitra is a Professor within the Division of Financial Research, Karnataka State Open College, Mysuru, Karnataka.
issued – January 1, 2026 12:08am IST
