Indian pharma faces US revenue slowdown amid scrutiny, tariffs: ICRA

ICRA projects Indian pharma firms' US revenue growth to slow due to price erosion, USFDA scrutiny and tariff risks, while high dependence on Chinese APIs persists despite PLI

The outlook for Indian pharmaceutical companies in the United States remains uncertain, with revenue growth expected to slow due to price erosion, regulatory scrutiny and the imposition of 50 per cent tariffs on Indian goods by the US, credit rating agency ICRA said.   According to a report by ICRA, its dataset of 25 Indian pharmaceutical companies is projected to report moderated year-on-year revenue growth of 3–5 per cent in financial year 2025-26 (FY26), compared to 9.9 per cent growth in FY25.   “The growth is expected to slow due to price erosion in select molecules and declining sales of oncology drug lenalidomide (Revlimid), which has been a key revenue contributor in previous years,” the agency said.   Regulatory scrutiny by the US Food and Drug Administration (USFDA) also remains a risk, with warning letters and import alerts delaying product launches and triggering failure-to-supply penalties.   These issues could impose significant costs for remediation, including consultant fees and increased management bandwidth, weighing on margins.   Adding to the uncertainty is the recent imposition of 50 per cent tariffs by the US on Indian imports across multiple sectors, effective August 27, 2025. “While pharmaceuticals have so far been exempt, the possibility of future inclusion remains a key monitorable,” the agency noted.   ICRA also flagged the US government’s proposal for a most favoured nation (MFN) pricing policy to bridge global drug price disparities, which could further impact Indian exporters.   Despite the US slowdown, Indian pharmaceutical companies are projected to post overall revenue growth of 7–9 per cent in FY26, supported by double-digit growth in both domestic and European markets.   At the same time, ICRA’s dataset shows continued high dependence on China for inputs such as active pharmaceutical ingredients (APIs), even as the Production Linked Incentive (PLI) and bulk drug park schemes enter their final stages.   Indian companies are expected to import more than 70 per cent of their API requirements from China for the fourth consecutive year, with import growth rates likely to remain flat.   Industry executives attributed this dependence to challenges in upstream chemical synthesis required to integrate key starting materials into APIs, as well as a shortage of skilled workforce.   However, ICRA noted that Indian API manufacturers are expected to see growth revival as easing raw material prices and global supply chain realignments provide fresh opportunities for the segment.