New US drug tariffs to hit Indian pharma industry hard: US President Donald Trump’s proposed 100% tariff on patented drug imports threatens to redraw the map of global pharmaceuticals. For India, the immediate concern is not the well-known generic drug industry. It is the smaller but strategically important contract development and manufacturing segment.
India’s pharmaceutical rise has long rested on generics. CDMOs are different. They work on complex molecules, clinical batches and specialised manufacturing for multinational innovators. They sit deeper inside global supply chains and closer to the innovation end of the business. They do not sell to patients. They serve firms that own patented products. That makes them more exposed to a policy shock aimed at branded drugs.
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US drug tariffs target patented products, not generics
The proposed tariff is aimed at patented medicines that, in Washington’s view, are overpriced in the US market. The political logic is easy to understand. The administration wants to squeeze foreign drugmakers on pricing while pushing manufacturing back to the United States. But industrial policy that tries to lower prices and force relocation at the same time often produces uncertainty before it produces investment.
That uncertainty matters for Indian CDMOs. The tariff may be imposed on innovator companies, not their Indian manufacturing partners, but supply chains do not absorb shocks neatly. Once the cost structure of innovator firms is disrupted, pressure travels through contracts, sourcing decisions and future capacity plans. Indian CDMOs cannot assume safety merely because the legal burden of the tariff falls elsewhere.
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India has been attractive to global pharma for obvious reasons: lower costs, skilled chemists, established regulatory experience and proven manufacturing depth. In a world turning more protectionist, those strengths can also be recast as offshore dependence. If innovator companies are pushed to expand production in the US, Indian firms may not face an immediate collapse in demand. They may instead face a slower migration of future business.
Nandini Piramal, chairperson of Piramal Pharma Ltd, and other industry voices have pointed out the impracticality of such relocation. Advanced pharmaceutical manufacturing is not plug-and-play. It requires years of regulatory approvals, specialised infrastructure and tacit knowledge built through repetition. To assume that this ecosystem can be transplanted quickly is to underestimate both the complexity of drug manufacturing and the inertia of global supply chains. Tariffs may accelerate intent but they cannot compress time.
Post-approval changes in manufacturing sites
There is a second constraint. In pharmaceuticals, shifting production is not just an investment decision. It is a regulatory event. FDA rules require post-approval changes in manufacturing sites, processes or controls to be reported through defined supplement pathways, and some site changes require prior approval before product from the new site can be distributed. FDA guidance also links manufacturing-site changes to CGMP inspection status, while the ICH’s Q12 framework makes clear that post-approval CMC changes must be managed through structured lifecycle controls, not executive intent alone. That makes tariff-led reshoring slower, more selective and more expensive than political rhetoric suggests.
However, what the US tariffs may be able to do is redirect capital. Innovators, facing tariff uncertainty, may begin to diversify manufacturing footprints and gradually build capabilities closer to their largest market. For Indian CDMOs this will be a new competitive dynamic, not from peers in Hyderabad or Ahmedabad, but from greenfield facilities in Ohio or Texas backed by policy incentives.
The tariff explicitly excludes generic and unbranded drugs, which account for roughly 90% of US drug consumption. The US healthcare system is structurally dependent on low-cost generics and cannot afford disruption without triggering price shocks and shortages. India supplies around 40% of these generics and hence most of the pharma industry is better equipped to weather the tariff storm.
But CDMOs are not most of the industry. They operate at the frontier where India seeks to move next, towards higher-value, innovation-linked manufacturing. It is here that the tariff will bite.
Companies with exposure to patented products will face a more immediate recalibration of their business models. Firms like Sun Pharmaceutical Industries and Glenmark Pharmaceuticals are at the receiving end of the problem. Their global ambitions require participation in precisely the segment now under policy scrutiny. The US government has made a smart move here. By excluding generics and focusing on patented drugs, the government will be able to protect the low-cost segment while penalising the high-cost one. So what serves Washington is essentially protected.
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However, many still believe that the impact may be more muted than the headline suggests. Estimates indicate that the tariff’s effect on earnings, at least for some firms, could remain marginal over the medium term. Global pharma companies are adept at navigating regulatory issues and pricing strategies. They may absorb some costs, renegotiate contracts or adjust supply chains incrementally. The pharmaceutical industry has long experience in operating within fragmented regulatory regimes.
Indian CDMOs face a geopolitical shift
Indian CDMOs cannot afford complacency. The tariff is less a direct threat than a signal, a marker of how geopolitical considerations are beginning to shape pharmaceutical economics. CDMOs may need to explore partnerships that include onshore manufacturing components, invest in capabilities that are harder to relocate and deepen integration with clients in ways that go beyond transactional contracts. The logic of making where it is cheapest is giving way to making where it is safest.
As advanced economies flirt with reshoring, India must resist the temptation to mirror such strategies reflexively. Instead, it should double down on the factors that made it indispensable: regulatory credibility, scale and a workforce that understands both chemistry and compliance.