U.S. to see higher generic drug prices on tariffs: Indian pharma CEO
During the Bio Asia 2026 summit in Hyderabad, Telangana, India, on February 18, 2026, a visitor visited Indian multinational pharmaceutical company Dr. He walks next to the logo of Reddy’s Laboratories. (Photo: Jwala Kotesh/NurPhoto via Getty Images)
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Indian drug manufacturer Dr. US President Donald Trump’s proposed tariffs on generic drugs will increase the price of these drugs for patients in the country, Erez Israel, managing director of Reddy’s Laboratories, told CNBC’s ‘Inside India’ program on Thursday.
Generic drugs are a low-margin business and “this kind of tariff level cannot be borne by the company,” Israeli said, adding that this would lead to prices increasing “by the magnitude of the tariff.”
Israel also said the process could take four to seven years, and two years may not be enough for companies to move their operations to the United States.
On Tuesday, Trump announced there would be a zero tariff on generic drugs imported into the United States for two years starting Aug. 1, followed by a 100% duty that would go into effect in August 2028 and rise to 200% a year later.
The move aims to redirect the generic drug industry to the US, which accounts for more than 90% of prescriptions.
Indian companies account for almost half of the supply of generic drugs to the US, according to data shared by lobby group Indian Pharmaceutical Alliance. But even though the U.S. is a key market, industry representatives said generic companies cannot afford tariffs of 100% to 200%.
“We are currently operating a very thin marginNamit Joshi, chairman of the Indian Pharmaceutical Export Promotion Council, said in an interview with ANI on Wednesday.
During the interview, Dr. Reddy’s CEO emphasized that sales of generic drugs to the US now account for only 27% of the company’s total sales, a figure that fell to 50% a few years ago. It will fall below 25% this year because other segments are growing faster, he said.
Tariffs are unlikely to force generic drug companies to move to the US, as it is not possible to produce these low-margin products in a country where production costs are higher than in India.
“The operation by us and others in India has enabled a significant reduction in the cost of medicine for the United States,” Israel said.
Global brokerage Nomura agreed, saying in a report on Wednesday that Indian companies are unlikely to move generic production to the US due to “low economic sustainability” but that tariffs could allow manufacturers to raise prices and increase profits.
