US announces 100% tariff on patented pharma; limited impact on India, Pg8

Key Highlights:

• The US announced a 100% tariff on imports of patented pharmaceuticals and associated ingredients, effective July 31.
• Generic drugs are currently exempt from the new tariffs, but this may change within a year.
• India's pharmaceutical exports to the US were $9.7 billion in 2025, representing 38% of its global pharma exports.
• The PLI Scheme for Pharmaceuticals, approved in 2021 with a financial outlay of Rs 15,000 crore, aims to boost patented drug production in India.

Detailed Insights:

• The US cites concerns over reliance on imports and potential global supply chain disruptions as reasons for imposing the tariffs.
• While India primarily exports generic pharmaceuticals, the tariffs could affect Indian firms producing branded, specialty drugs, or supplying inputs for patented medicines.
• The US may use tariffs as leverage to push drugmakers to lower prices, shift manufacturing to the US, and gain control over critical pharmaceutical supply chains.
• India's Production Linked Incentive (PLI) scheme focuses on promoting the manufacturing of biopharmaceuticals, complex generic drugs, patented drugs, gene therapy drugs, orphan drugs, and complex excipients.
• The US is India's largest market for pharmaceutical exports, accounting for approximately 40% of India's total pharmaceutical exports.

Key Concepts Involved:

• Ad valorem duty: A tariff based on a fixed percentage of the value of the imported product.
• Generic drugs: Medications sold under their chemical name rather than a brand name, typically after the patent on the original drug has expired.
• Production Linked Incentive (PLI) Scheme: A scheme that provides financial incentives to companies for increasing domestic production in specific sectors.