Following a period of immunity from US import tariffs, the global generics sector may now have to contend with similar taxes to the branded drug industry as President Donald Trump looks to give America a domestic manufacturing boost.
According to a Truth Social post from 21 July, Trump plans to introduce 100% tariffs on generic drugs imported into the US in 2028 for a year, at which point he will up the rate to 200%.
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This comes as the Trump administration continues to push for the reshoring of drug manufacturing to the US as some raise concerns about America’s external reliance on foreign generic medicine imports – which make up 90% of prescriptions signed in the US. According to research from the US Pharmacopeia, more than half of the active pharmaceutical ingredients (APIs) in generic drugs prescribed in the US are sourced from India and the EU.
To further back the tariff initiative, Trump is also threatening companies that don’t opt to build “plant and equipment within the stated period of time given to them” with a presumable financial penalty for non-compliance. This marks a similar approach to that taken by Trump when imposing tariffs on branded pharmaceuticals – though several larger pharma companies have inked drug pricing deals with the White House to secure tariff reprieve.
Some countries have also secured immunity or reduced tariff rates by striking a deal with the Trump administration, with one example being the UK, which will now be subject to zero tariffs following a pharma trade deal. However, researchers now estimate that this could paint a costly economic picture for Britain – potentially siphoning around £45bn ($60bn) from the UK National Health Service (NHS).
Meanwhile, the EU, Japan, South Korea, Liechtenstein and Switzerland have all had tariffs capped at 15% after cutting a deal with the White House.
Indian generics manufacturers could feel the strain
While the period of tariff reprieves up until 2028 will likely be welcome news for the global generics sector, India – one of the mainstay suppliers of US generics – could bear the brunt of these import taxes if they come into force.
In a LinkedIn post, ex-GSK EVP and founder of Arks Knowledge Consulting, Salil Kallianpur, noted that protecting market share in the long run will require Indian companies to focus on accelerating US manufacturing, expanding contract manufacturing partnerships, and navigating trade negotiations for exemptions.
Meanwhile, Ravi Varanasi, founding partner of SPRV Consultants, believes that the new tariffs could “raise prices, eliminate marginal suppliers and increase the risk of drug shortages,” as per a LinkedIn post.
“Patented drug manufacturers, with their high margins, may announce American factories and negotiate exemptions. Generic manufacturers often cannot,” Varanasi added.
“Calling a tariff a ‘penalty’ does not change who ultimately pays it. American patients, hospitals, insurers and taxpayers will bear the cost. A policy advertised as reshoring medicines, protecting security and restoring jobs may instead reshore inflation while weakening supply reliability,” he concluded.
