US Tariff Threat May Hit Indian Pharma Earnings by Up to 10%: SBI Research Warns

SBI Research warns that a planned 50% tax on Indian pharmaceutical exports could cut profits and hurt India’s important role in the global supply chain for generic medicines.

A new analysis from SBI Research says that a proposed 50% tax on Indian medication exports to the US might hurt the profits of big pharma companies by 5–10% in FY26. This is bad news for India’s pharmaceutical industry. Almost 40% of India’s pharmaceutical exports go to the US right now. If the US government did something like this, it might have a big effect on revenue, profit margins, and worldwide competitiveness.

The pharmaceutical industry, which is frequently called India’s “silent global warrior,” may be in the middle of a historic storm. SBI Research has raised the alarm: if the US slaps a hefty 50% tariff on Indian pharmaceutical imports, as has been suggested, Indian drugmakers could lose up to 10% of their profits in the following financial year.

There is a lot at stake. The US market is the biggest and most profitable pharmaceutical market in the world, and many of India’s biggest pharmaceutical companies get 40–50% of their entire sales from it. Almost 40% of all Indian pharmaceutical exports went to the US in FY25. This made up 6% of the US’s total pharmaceutical imports in 2024.

The paper says that this kind of tariff would not only hurt India’s cost advantage, but it would also hurt margins, especially since companies may not be able to pass on the extra costs to customers because there is a lot of price-sensitive competition in the generic market.

India has been the main source of affordable medicines for a long time. It has been a key supplier of important products, such as antibiotics, oncology therapies, and medications for managing chronic diseases. India is a major supplier of generic medications to the US, where generics account for 90% of all prescriptions but just 26% of overall drug spending (as of 2018).

SBI also says that if the US were to find other suppliers or relocate API and medication manufacture back to the US, it would take at least three to five years to build up enough capacity. Such a change might mess up the global supply chain, raise the cost of drugs, and have a direct effect on millions of American patients.

The research adds a shocking amount to show the rippling effect: the average person in the US spends $15,000 a year on healthcare. Because Indian generics make up such a large part of that ecosystem, any trade restriction will affect not only Indian enterprises but also American families.