2 weeks ago
Indian drugmakers shift from US generics to new markets
Indian companies make lots of medicines, including cheaper copies called generics, and sell many of them in America.
The American government, led by Donald Trump, wants medicines sold in America to be made in America.
So it put a big new tax, called a tariff, on some medicines made in other countries, and said it might do the same for generics in 2028.
That made selling to America harder and riskier for Indian medicine companies.
So companies like Sun Pharma, Lupin and Dr Reddy's decided to sell their medicines in more countries instead.
They are also making special, harder-to-make medicines that other companies don't copy as easily.
Their sales fell in America but grew in Europe, Russia, India and other regions.
One diabetes medicine called semaglutide had a quality problem, and Dr Reddy's had to stop supplying it for now.
The companies say it takes too long to move their factories to America, so they are looking for new customers around the world.
For now, they are hoping that new countries, new medicines and their home market in India will keep them strong.
India's leading drugmakers including Sun Pharma, Lupin and Dr Reddy's are reducing dependence on US generics and moving into premium complex drugs and emerging markets.
The Trump administration imposed a 100% import tariff on branded medicines in early April and threatened to extend tariffs to generics from August 2028.
Dr Reddy's North America revenue fell 35% year-on-year to Rs 2,205 crore, while Sun Pharma's US sales fell 9.7% to $427 million.
Growth accelerated outside the US: Dr Reddy's emerging markets rose 31% and its Europe business grew 13%, while Aurobindo Pharma's Europe grew 25.6%.
Dr Reddy's CEO Erez Israeli said it is not practical to move production facilities to the US within the two years before generics tariffs take effect.
- Who
- Indian pharmaceutical companies including Sun Pharma, Lupin, Dr Reddy's Laboratories and Aurobindo Pharma, under tariff pressure from the Trump administration.
- What
- Drugmakers are shifting from US generic markets to non-US geographies and premium complex products to ward off margin pressure.
- Where
- India, the United States, Europe, Russia/CIS, Latin America, Africa and other emerging markets.
- When
- Highlighted in Q1FY27 results; the 100% US tariff on branded drugs was imposed in early April, with a generics tariff threat announced for August 2028.
- Why
- To counter US import tariffs, price erosion, rising competition and loss of exclusivity that are squeezing the US generics business.
Pharma industry & diversification advocates
US reshoring policy supporters
US tariffs on imported drugs
Pharma industry & diversification advocates
Tariffs add pressure to a US market that already faces price erosion and competition, and moving production facilities within the two-year window is not practical.
US reshoring policy supporters
Tariffs are intended to force all suppliers of high-value proprietary medicines to manufacture locally and to reshore generic pharmaceutical production in America.
Future growth strategy
Pharma industry & diversification advocates
Drugmakers should lower dependence on US generics by expanding in India, Europe and emerging markets and shifting to complex generics, biosimilars and specialty medicines.
US reshoring policy supporters
The US market remains critical to earnings, and losing sales of even individual products such as lenalidomide can sharply hurt overall company growth.
Key facts
- US tariff on branded drugs
- 100% import tariff, imposed in early April
- Generic tariffs
- Threatened to take effect August 2028
- Dr Reddy's North America revenue
- Down 35% YoY to Rs 2,205 crore (Q1FY27)
- Sun Pharma US sales
- Down 9.7% to $427 million
- Sun Pharma innovative medicines
- Up 12.8% to $351 million
- Dr Reddy's emerging markets
- Up 31% to Rs 1,830 crore
- Dr Reddy's Russia/CIS growth
- Up 24% to Rs 1,120 crore
- Lupin's complex launches target
- 20 launches by 2028 plus 5 biosimilar filings
Quotes
Dr Reddy’s CEO Erez Israeli
CEO of Dr Reddy’s Laboratories
“"the first quarter earnings have positively surprised investors as India growth for most players has turned out to be strong and for some names it is at a level we haven’t seen in the last several years."”
financialexpress.com
“"the company has two years before tariffs take effect and that it’s not practical to move any facility in that timeframe."”
financialexpress.com











