US to impose 200% tariff on generic drug imports by 2029, pressuring Indian pharma
The US will introduce steep tariffs on generic drug imports starting in 2028, forcing Indian pharmaceutical companies to accelerate local manufacturing investments or risk losing access to a market that accounts for nearly 90% of American prescriptions.
US President Trump announced a phased tariff structure on generic drug imports, starting with a two-year tariff-free period followed by a 100% duty on August 1, 2028, and a 200% duty by August 1, 2029. The policy was outlined in a post on Truth Social and marks a significant expansion of previous trade measures that exclusively targeted branded and patented medicines.
Generic medicines represent nearly 90% of prescriptions dispensed in the US, according to the Food and Drug Administration. This makes the American market a critical revenue driver for Indian drugmakers, who have historically relied on cost-efficient domestic manufacturing to supply global demand.
The two-year grace period provides temporary relief but establishes a strict deadline for supply chain restructuring. The administration explicitly designed the phased approach to compel pharmaceutical companies to relocate manufacturing plants and related infrastructure to the US.
Indian pharmaceutical firms possess varying degrees of readiness for this regulatory shift. Aurobindo Pharma and Senores Pharmaceuticals already maintain substantial local manufacturing presences catering to the US generics market. Dr Reddy’s, Lupin, Cipla and Zydus Lifesciences also hold some existing manufacturing footprint in the country.
Conversely, companies heavily reliant on overseas production face heightened margin pressure. Alkem Laboratories and Torrent Pharmaceuticals depend largely on Indian manufacturing facilities and have limited cash flow exposure to US generics. Biocon similarly relies on production facilities in India and Malaysia for its biosimilar and generic portfolios.
Industry executives note that while India’s manufacturing ecosystem remains globally competitive, prolonged tariff barriers will alter capital allocation strategies. Companies may be forced to expand domestic US manufacturing capacity or pursue contract manufacturing partnerships to preserve market access.
This generic drug tariff complements the administration’s most-favoured-nation drug pricing policy, which seeks to align US medicine prices with those of other developed economies. The policy covering patented and innovative medicines remains unchanged following agreements reached last year with several multinational drugmakers.
