According to market analysis firm Nuvama, branded and patented pharmaceutical companies that have not agreed to lower drug prices through Most Favoured Nation (MFN) agreements will face 100 per cent tariffs.
Similarly, companies that move production to the US but do not sign an MFN agreement may also face a 20 per cent tariff.
“Indian CDMOs may face some challenges as innovators would now see pressure to move production to the US,” a Nuvama analysis said. It added that this can create uncertainty for CDMOs with their US customers.
Calling the tariff on patented medicines a risk working against affordable and reliable access to advanced therapies, Nandini Piramal, chairperson at Piramal Pharma, said that these products are among the most complex and high-cost in the system, with deeply global supply chains in which India plays a critical role.
“Given the specialised capabilities required, this capacity cannot be quickly replicated across geographies without introducing cost and supply risks,” she added.
However, players such as Alkem Labs, Piramal Pharma and Jubilant Pharmova are likely to benefit since their operational CDMO units are based in the US.
The Nuvama analysis added that CDMOs would not have to pay the tariffs, and the burden of tariffs remains with the innovators.
Tariff threat to affect certain Indian drugmakers
The tariff threat is expected to selectively impact Indian drugmakers with meaningful exposure to innovative medicines in the US market.
Most Indian pharma exporters are expected to remain insulated as the tariff excludes generic and unbranded drugs, which make up for around 90 per cent of US drug use, for at least a year to avoid shortages and price increases.
In this scheme, India remains the US’s biggest generic supplier, catering to around 40 per cent of the latter's generic drug market.
Pharma experts add that the tariffs are not expected to affect India’s drug exports to the US, which stood at $10.52 billion, accounting for 34.6 per cent of the country’s overall pharma exports worth $30.38 billion in financial year 2025 (FY25).
However, drugmakers such as Sun Pharma and Glenmark Pharmaceuticals may be the most exposed due to their focus on patented products and direct commercial presence in the US speciality drug space.
“Sun Pharma’s key drug, Ilumya, is manufactured in South Korea and is likely to see a 15 per cent tariff. Some of its other specialty drugs are made outside the US, which will also be subject to tariffs,” a Nuvama analysis said.
Similarly, Glenmark recently commercialised its allergy drug Ryaltris in the US. However, since it is manufactured outside the country, it is subject to a 100 per cent tariff.
The report added that Sun Pharma maintains a growing innovative business in the US alongside strong domestic and emerging market (EM) segments.
“Despite high volatility last week, we believe US tariffs will have only a minor impact at around 2 per cent of Sun’s estimated earnings before interest, tax, deduction and amortisation (Ebitda) for FY28,” Nuvama said.
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Innovators would now face pressure to move production to the US
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Specialised capabilities cannot be quickly replicated across geographies, say industry insiders
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Tariff excludes generic and unbranded drugs which make up around 90 per cent of US drug use
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Indian drugmakers with exposure to patented products and US specialty drug space are likely to be worst hit
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