President Donald Trump has said generic drug manufacturers must move production to the United States or face a 100% import tariff from August 2028, with the levy set to rise to 200% in August 2029. The proposal is aimed at bringing more generic pharmaceutical manufacturing onshore, but it could place pressure on a global supply chain that provides low-cost painkillers, antibiotics, cholesterol treatments, cancer drugs, and other off-patent medicines to American patients. Generic treatments account for more than 90% of U.S. prescriptions and are largely produced in India, Europe, and China, suggesting the tariffs may increase manufacturing costs for companies already operating on thin margins. Investors may also question how the policy fits with Trump's broader effort to lower U.S. drug prices, given that production costs are generally lower in markets such as India.
Sandoz Group, a Swiss company and one of the world's largest generic drug producers, saw its shares fall as much as 4.2% in Zurich on Wednesday, marking their biggest decline since April. The company said it was too early to determine the implications of the proposed tariffs, while adding that generics and biosimilars already play a significant role in lowering healthcare costs and supporting patient access. Sandoz Chief Executive Richard Saynor warned last year that steep U.S. tariffs could make medicines more expensive and restrict availability. Sandoz, alongside Teva Pharmaceutical Industries NYSE:TEVA and Viatris NASDAQ:VTRS, produces lower-cost copies of branded medicines after patent protection expires, and the proposed duties could force manufacturers to raise prices or withdraw some products from the U.S. market. Nathan Gray, a senior research fellow at Adelaide University's Institute for International Trade, said the policy may reduce access to generic medicines, weaken competition, and leave consumers with fewer alternatives to higher-priced branded drugs.
India could face the greatest impact because it is the largest exporter of generic medicines to the United States, with pharmaceutical exports to America totaling $10.5 billion in 2024-25. The NSE Nifty Pharma index, which tracks 20 Indian drugmakers, declined as much as 1.9% in Mumbai on Wednesday, while Sun Pharmaceutical Industries, a leading Indian pharmaceutical company, also fell by as much as 1.9%. The final exposure for Indian manufacturers remains uncertain because a February trade agreement said India would receive negotiated outcomes covering generic pharmaceuticals and ingredients. Glenmark Pharmaceuticals and Lupin, two India-based drugmakers, produced roughly 65% of all U.S. birth-control pill prescriptions in 2024, highlighting how concentrated parts of the supply chain may be. Vishal Manchanda, an analyst at Systematix Group, said a new manufacturing plant would likely require at least three years to begin operating, which is longer than the tariff timetable and could encourage companies to reduce their dependence on U.S. revenue or pursue growth in other markets.