100% tariff on branded drugs: India likely to face impact as generics make up only 40% of its US medicine exports

US President Donald Trump has announced a 100% tariff on branded and patented medicines. This tariff will be effective from October 1, 2025. This tax will not apply to companies that are setting up their manufacturing plants in United States.

Trump said - 'From October 1, we will impose 100% tariff on branded or patented medicines, except for those companies that are setting up their medicine manufacturing plants in America.

World's largest exporter of generic medicines

India is the world largest exporter of generic medicines to the US. In 2024, India exported medicines worth approximately $8.73 billion (about ₹77,000 crore) to the US, representing approximately 31% of India's total pharmaceutical exports.

• According to a report, in 2022 the US healthcare system saved 219 billion dollars. Between 2013 and 2022, this saving was 1.3 trillion.
•  Out of the prescriptions written by doctors in US, approximately 4 out of every 10 medicines are made by Indian companies.

• India’s pharmaceutical industry is a global powerhouse ranking 3rd in the world by volumeand 14th in terms of value of production supplying over 50% of global vaccine demand and nearly 40% of generics to the US, according to PIB.

•  Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance, says, "The executive order refers to patented/ branded products supplied to the US. It is not applicable to generics medicines."

Generic medicine:

·         This is the medicine that comes to market after the patent of the branded medicine expires. It is made using the same formula as the branded medicine.

·         It does not have a new patent, because it is a copy of an existing formula.

·         Generic drug companies don't have to bear research costs, so its price can be 80% to 90% lower compared to branded medicine.

Branded medicine:

·         This is the original medicine that is discovered by a pharmaceutical company after extensive research and heavy expenses.

·         The company that makes it gets patent rights for a fixed time (usually 20 years).

·         During this period, no other company can make that medicine using that formula.

·         Its price is very high to recover the costs spent on research and development.