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U.S. tariffs on generic drugs hurt everyone, experts warn drugmakers are unlikely to move to the U.S

2026-07-24·newswire-us-stock-072403
U.S. tariffs on generic drugs hurt everyone, experts warn drugmakers are unlikely to move to the U.S.

Earlier this week, U.S. President Trump announced on social platforms that he would impose 100% tariffs on generic drugs imported into the United States starting in August 2028, and one year later, starting in August 2029, the tariffs would double to 200%.

This tariff policy is expected to have an impact on India's generic drug exports, as the United States is India's largest exporter of generic drugs. In 2025, India's pharmaceutical exports to the United States will reach US$9.7 billion, accounting for 38% of the country's total global pharmaceutical exports.

Erez Israeli, chief executive of Indian pharmaceutical company Dr. Reddy's Laboratories, said on Thursday that generic drug profits are razor-thin and the tariffs announced by Trump are unaffordable for the company and will only cause U.S. drug prices to rise by the same amount as the tariffs.

He also added that the two-year window left by Trump is not enough for companies to move operations to the United States, which would actually take four to seven years. Generic drugs account for more than 90% of prescription drugs in the United States, so tariffs will have a huge impact on the U.S. pharmaceutical system.

But Trump revealed that the real purpose of the tariffs was to prompt the generic drug industry to move to the United States.

However, it is widely believed in the industry that tariffs are unlikely to prompt generic drug companies to relocate to the United States, as producing generic drugs in the United States is almost unprofitable and production costs in the United States are significantly higher than in India.

Nomura Securities also said in a report on Wednesday that Indian companies are unlikely to shift generic drug production to the United States due to low economic viability. It added that tariffs could allow generic drug manufacturers to raise prices and improve profits.

Mariana Socal, associate professor at the Johns Hopkins Bloomberg School of Public Health, pointed out that generic drug production requires equipment, infrastructure and quality standards.

Marta Wosińska, a senior fellow at the Brookings Institution's Health Policy Center, added that companies also need to consider whether the threat of tariffs is enough to motivate them to establish manufacturing plants in the United States. A 200% tariff may not be enough to justify the huge upfront costs of moving factories to the United States.

Some experts warn that tariffs may be counterproductive. Socal said that if there is not enough incentive for generic drug manufacturers to move production to the United States, once the tariffs take effect, manufacturers may simply exit the United States and prioritize other markets where drug prices are higher.

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Full text

U.S. tariffs on generic drugs hurt everyone, experts warn drugmakers are unlikely to move to the U.S

[U.S. tariffs on generic drugs are harmful to others, and experts have warned that pharmaceutical manufacturers are unlikely to move to the United States] Earlier this week, U.S. President Trump announced on social platforms that he would impose a 100% tariff on generic drugs imported into the United States starting in August 2028, and one year later, starting in August 2029, it would double to 200%. This tariff policy is expected to have an impact on India's generic drug exports.

Earlier this week, U.S. President Trump announced on social platforms that he would impose 100% tariffs on generic drugs imported into the United States starting in August 2028, and one year later, starting in August 2029, the tariffs would double to 200%. This tariff policy is expected to have an impact on India's generic drug exports, as the United States is India's largest exporter of generic drugs. In 2025, India's pharmaceutical exports to the United States will reach US$9.7 billion, accounting for 38% of the country's total global pharmaceutical exports. Erez Israeli, chief executive of Indian pharmaceutical company Dr. Reddy's Laboratories, said on Thursday that generic drug profits are razor-thin and the tariffs announced by Trump are unaffordable for the company and will only cause U.S. drug prices to rise by the same amount as the tariffs. He also added that the two-year window left by Trump is not enough for companies to move operations to the United States, which would actually take four to seven years. Generic drugs account for more than 90% of prescription drugs in the United States, so tariffs will have a huge impact on the U.S. pharmaceutical system. But Trump revealed that the real purpose of the tariffs was to prompt the generic drug industry to move to the United States. However, it is widely believed in the industry that tariffs are unlikely to prompt generic drug companies to relocate to the United States, as producing generic drugs in the United States is almost unprofitable and production costs in the United States are significantly higher than in India. Nomura Securities also said in a report on Wednesday that Indian companies are unlikely to shift generic drug production to the United States due to low economic viability. It added that tariffs could allow generic drug manufacturers to raise prices and improve profits. Mariana Socal, associate professor at the Johns Hopkins Bloomberg School of Public Health, pointed out that generic drug production requires equipment, infrastructure and quality standards. Marta Wosińska, a senior fellow at the Brookings Institution's Health Policy Center, added that companies also need to consider whether the threat of tariffs is enough to motivate them to establish manufacturing plants in the United States. A 200% tariff may not be enough to justify the huge upfront costs of moving factories to the United States. Some experts warn that tariffs may be counterproductive. Socal said that if there is not enough incentive for generic drug manufacturers to move production to the United States, once the tariffs take effect, manufacturers may simply exit the United States and prioritize other markets where drug prices are higher.

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