India’s pharma industry is bracing for headwinds as the United States inches closer to reshoring its drug manufacturing capacity. While Indian exporters narrowly escaped the first round of US tariffs, recent policy signals from the Trump administration suggest this reprieve may be short-lived. President Donald Trump’s executive order to boost domestic drug production marks a turning point—one that could significantly reshape the global pharmaceutical supply chain.
On May 5, President Trump signed an executive order aimed at rebuilding the US prescription drug manufacturing ecosystem. The order streamlines regulatory approvals for pharmaceutical plants and encourages domestic production of prescription drugs, active pharmaceutical ingredients (APIs), and critical raw materials.
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The rationale, as outlined by the White House, is national security. Setting up pharmaceutical manufacturing capacity in the US can take anywhere from five to 10 years, a delay that could leave the country vulnerable in a crisis. The executive order seeks to cut this timeline by reducing red tape and accelerating approvals—a familiar plank of Trump’s broader Make in America strategy.
But such a plan inevitably impacts countries like India, which is among the largest suppliers of generic drugs to the US. Despite its ambitions, America may find it challenging to localise production in a sector long dominated by established overseas players with cost advantages and manufacturing scale.
Pharma industry’s exposure to the US market
For India, the implications are significant. Pharmaceutical exports to the US accounted for about 31% of the country’s total pharma exports in the past year, valued at roughly $13 billion (Rs 1.08 lakh crore). Major Indian players such as Sun Pharma, Cipla, Lupin, Dr Reddy’s Laboratories, and Zydus Lifesciences derive between 30% and 50% of their revenue from the American market.
Sun Pharma, for instance, generates 32% of its revenue from the US. Cipla earns 28–30% from North America, while Lupin draws 37%. Dr Reddy’s and Zydus Lifesciences are even more exposed, with 43–47% and 45–47% of their sales coming from the US respectively. These companies have made substantial investments in building US FDA-compliant facilities and securing Abbreviated New Drug Applications (ANDAs) to capture their share of the US generics market—which accounts for 90% of all prescriptions filled in the country.
Challenges of local manufacturing in the US
While the Trump administration is offering incentives to lure global pharma players to establish manufacturing bases in the US, Indian companies are unlikely to rush in. The cost advantages of producing in India are difficult to replicate. Moreover, establishing operations in the US comes with high capital expenditure and ongoing regulatory overheads.
Instead of building from scratch, many Indian firms are exploring mergers, acquisitions, or partnerships with US-based manufacturers as a more viable entry route. This strategy may allow Indian firms to retain market access without compromising their cost competitiveness.
Sun Pharma is already looking to pivot towards high-margin specialty drugs in areas like dermatology and ophthalmology to buffer against potential revenue hits. Cipla could rely on its diversified product portfolio to hedge risks in its injectable and respiratory segments. Lupin, despite advances in complex generics, remains vulnerable to pricing pressures, while Dr Reddy’s and Zydus must contend with uncertainties in the injectables and biosimilars space.
Relevance for India’s broader strategic interests
The US order is not just a commercial challenge—it is a test of India’s diplomatic and strategic dexterity. New Delhi has consistently positioned itself as a reliable trade partner and shares a growing strategic relationship with Washington. A constructive path forward could lie in fostering joint ventures or contract manufacturing arrangements that allow Indian drugmakers to retain access while aligning with America’s reshoring goals.
Rather than erecting hard barriers, the US could consider working with allies to build a more resilient, affordable, and accessible pharma supply chain. The White House itself has acknowledged the existence of “critical barriers and gaps” in developing a cost-effective domestic industry. Despite producing two-thirds of prescription drugs sold in value terms within its borders, the US still imports around $200 billion worth of drugs—most of them cheaper generics that Indian firms excel at producing.
Looking beyond the US
While no other market can match the scale and profitability of the US, Indian companies are already eyeing an America-plus strategy to de-risk their operations. Europe, ASEAN, Africa, and Latin America are emerging as alternative markets, albeit with their own regulatory and pricing complexities.
The goal is not to decouple from the US market entirely, but to reduce exposure to policy unpredictability. Trump’s rhetoric may appeal to domestic constituencies, but a blanket protectionist stance could backfire—hurting American consumers with higher drug prices and limiting access to affordable generics.
A global industry, not a zero-sum game
In an increasingly interconnected world, the pharmaceutical supply chain cannot be reshaped overnight or within borders. Attempting to do so through executive fiat risks long-term disruption for patients and providers alike.
Indian pharmaceutical companies—armed with regulatory experience, affordable production models, and a deep understanding of the US market—can and should be part of the solution. A more collaborative model, built on mutual strengths rather than nationalistic walls, would serve both economies better.
Ultimately, Trump’s tariff gamble could backfire—not just on Indian manufacturers, but on American patients who rely on affordable medication. As India recalibrates its global pharma strategy, it must prepare for volatility while continuing to advocate for a rules-based, inclusive approach to global health security.