Even as the Trump administration has threatened imposing tariffs of up to 200% on generic pharmaceutical exports to the US unless drugmakers shift their manufacturing units to America, Indian manufacturers say the move is commercially unviable due to high labour costs and compliance burdens.
Indian exporters said there is limited commercial incentive to direct significant capital toward a segment that generates a disproportionately small share of revenue. The exporters are now planning to meet the government to discuss possible measures if such a challenge arises.
"Shifting the entire generics manufacturing ecosystem from India to the US remains a distant prospect. The investments currently being pledged in the US are concentrated primarily in branded and patented drugs, not generics. This is a critical distinction—generics account for 90% of all US prescriptions, yet they contribute only around 13% of total prescription drug spending by value," said Namit Joshi, Chairman of the Pharmaceutical Export Promotion Council of India (Pharmexcil).
India is the largest supplier of pharmaceutical products to the US, accounting for 18.44% of the country's total pharma imports, with a dominant share in generic medicines. Indian companies supply 47% of all generic prescriptions dispensed in the United States, making India the country's largest source of affordable generic medicines. Nearly 38% of India's pharmaceutical exports are destined for the US market.
According to Indian pharma exporters, even if generic drug manufacturing were to be established domestically in the US, the active pharmaceutical ingredients (APIs) required for production would still need to be imported, as the country lacks sufficient API manufacturing capacity.
"For these reasons, a full-scale reshoring of the generic pharmaceutical ecosystem to the United States is not achievable within a two-year timeframe," Joshi added.
Pharma exporters plan to meet the Indian government to discuss the issue, according to industry sources. Even if the US pushes exporters to set up manufacturing units there, compliance requirements and labour costs will remain major hurdles. While several large players already have tie-ups with American companies and manufacturing facilities in the US, the move would be particularly challenging for small and medium-sized exporters.
"It's almost impossible to manufacture in the US, as there are no APIs, raw materials or packaging materials being produced there. Labour costs are almost 10-15 times higher, so it may be good to threaten the world, but practically it is almost impossible," said Vijay Shah, Managing Director of Stallion Laboratories, an exporter to the US.
With India and the US currently engaged in trade negotiations, exporters are hopeful of securing relief from such hefty tariffs.
"While we note the proposed tariff measures, we are hopeful that both governments will engage in constructive dialogue to protect patient interests, maintain resilient pharmaceutical supply chains, and promote fair and mutually beneficial trade," said Harish K Jain, Director of Embiotic Laboratories.
US President Donald Trump on Tuesday threatened to impose tariffs of up to 200% on generic pharmaceutical exports within two years unless the manufacturing of those drugs is shifted to the US.