Industry insiders and analysts indicated that Indian pharmaceutical firms are expected to promote increased third-party manufacturing and geographic diversification due to uncertainties surrounding US tariff policies.

US President Donald Trump declared a 100 percent tariff last week on branded and patented medications being brought into the nation.

Last week, US President Donald Trump declared a 100 percent tariff on imported branded and patented medications into the nation. Pharmaceutical companies that have started building plants in the US might be spared from these taxes.

Among Indian firms, Sun Pharmaceutical Industries stands out for its considerable exposure to the US market. In FY2025, out of their stated $1.22 billion global sales from patented goods, America represented approximately $1.1 billion — around 17 percent of overall revenue.

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As per HSBC Global Investment Research, the patented products of Sun Pharma are primarily produced by international contract development and manufacturing organization (CDMO) partners. For Ilumya, the company’s main patented medication accounting for approximately 56 percent of total patented sales in FY25 — the active ingredient is produced in South Korea and the final product is manufactured in Europe.

Analysts emphasize that although the tariff action is generally detrimental for Sun, the impact will rely on elements like supply chain distribution, intellectual property (IP) placement, and CDMO agreements.

 

“In the worst scenario, Sun would need to relocate production to CDMO partners with plants in the US or move products to its three US facilities.” HSBC analysts state that it might also reveal new capital expenditures or purchase a facility in the US, having more than $3 billion in cash accessible as of June 2025.

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Regarding the impact on the industry, a CEO of a drug exporter to the US mentioned that his company has already investigated fill-finish operations at American CDMOs. "Up until now, generics have stayed unimpacted, but the threat looms." We have initiated discussions with US CDMOs and can relocate some production if necessary. Nevertheless, the cost advantage would disappear — it’s a difficult decision for both us and the US government,” he remarked.

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According to a BCG-IPSO report that emphasized India’s strengths, CDMOs benefit from workforce cost savings of 70–80 percent and infrastructure expenses that are 85 percent lower than those in the West, highlighting the enduring competitiveness of Indian manufacturing.