India’s pharmaceutical industry, famously known as the “pharmacy of the world,” plays a crucial role in global healthcare, supplying nearly 20% of generic medicines worldwide. With pharmaceutical exports reaching US$ 30.4 billion in 2024 and strong growth projections ahead, India stands at a strategic crossroads, particularly in its largest export market—the United States.
As the US-China trade tensions reshape global supply chains, India has a unique opportunity to strengthen its position as a reliable pharma supplier. However, challenges remain beyond just tariff threats.
This article explores the broader issues impacting Indian pharma’s future in the US market, including regulatory compliance, quality standards, supply chain dependencies, intellectual property concerns, and ESG expectations. It highlights how India can strategically navigate these hurdles through trade discussions, targeted policy moves, and industry initiatives to transform from a backup supplier to a strategic healthcare partner for the world’s largest pharmaceutical market.
India, known as the “pharmacy of the world,” supplies nearly 20% of global generic medicines, playing a key role in making healthcare more affordable worldwide.
In 2024, India’s drugs and pharmaceutical exports reached US$ 30.4 billion, growing at a 5-year CAGR of 8%. It is the 11th largest exporter of pharmaceutical products, accounting for about 6.9% of total exports. The sector is further expected to grow significantly, with projections of US$ 350 billion in exports by 2047.
The US is the largest importer of Indian pharmaceuticals, followed by the UK, South Africa, France, and Canada. US dominates by making up 35% of India’s exports.
Recently, the sector avoided potential setbacks when the US excluded pharmaceuticals from new tariffs, though it has signalled that tariffs may still be implemented. Indian drugmakers remain hopeful, especially since generic drugs are critical to affordable healthcare for the US as well.
In this article, we focus on the challenges, as well as the opportunities that come up for India amidst the US-China trade war.
The US is the world’s largest importer of pharmaceutical products, accounting for around 20% of global pharma imports. It is India’s largest export destination for pharmaceutical products and conversely, India is the fifth-largest supplier of pharmaceuticals to the US.
The threat of US tariffs can be a challenge for Indian pharma, with major companies like Dr. Reddy’s, Sun Pharma, and Aurobindo deriving 40–45% of their revenue from the US—making them particularly vulnerable to any trade policy changes.
On the brighter side for Indian pharma, ongoing US-China trade tensions and the broader tariff war have highlighted the risks of overreliance on China—particularly for active pharmaceutical ingredients (APIs)—creating fresh opportunities for India to step in as a more reliable supplier.
As a result, a gradual shift in sourcing is expected to be seen, with US buyers increasingly looking to India not just for finished formulations, but also for critical inputs like APIs. This shift has the potential to elevate India from being a backup supplier to a strategic partner in the global pharmaceutical ecosystem.
A key strategic move for India would be to closely track the segments where China currently holds a dominant share in the US pharma market—particularly in APIs, antibiotics, and key intermediates, and work toward increasing its presence in those areas. China has a leading share of around 72% of US imports of APIs, vitamin C, and chemical reagents. India can look to absorb some of this demand.
But given that India is itself importing around 70% of its APIs from China, because they come out more price competitive than domestic production, this shift is expected to take some years.
The Department of Pharmaceuticals has drawn a list of 56 APIs as priority under Make in India. The Production Linked Incentive (PLI) Scheme for domestic manufacturing of critical KSMs, DIs, and APIs in India has a financial outlay of ₹6,940 crore for FY 2020-21 to FY 2029-30. It offers incentives for 41 products, with 48 applications approved out of 249 received, committing ₹3,938.57 crore in investments and creating around 9,618 jobs. So far (as of 2024), 27 projects have been commissioned with an installed capacity of 41,881 metric tonnes. The scheme aims to reduce import dependence, offering six years of incentives based on incremental sales. Fermentation-based products get 20% incentive initially, tapering to 5%, while chemical synthesis products receive 10% throughout. IFCI Ltd is the Project Management Agency.
The success of such policies is critical if India has to come anywhere close to the scale of China, and also maintain the consistent quality required to become an alternative export hub.
In 2024, China exported US$ 7.8 billion worth of pharmaceutical products, much of it now at risk due to trade tensions and supply chain shifts. This also presents an opportunity for India to expand in areas where China has a strong US market presence—such as first aid kits, penicillins, gauze, wadding, and bandages.
Targeting these product lines could help India capture displaced market share and strengthen its position as a reliable alternative in the global pharma supply chain.
The US pharmaceutical industry is subject to stringent regulatory scrutiny from multiple bodies, including the FDA, Federal Trade Commission (FTC), Department of Justice (DOJ), and Department of Health and Human Services (HHS). These agencies ensure compliance with laws regarding promotion, particularly when it involves off-label indications or misleading content.
In 2023, the USFDA conducted 225 inspections in India, resulting in 18 Official Action Indicated (OAI) cases and 117 Voluntary Action Indicated (VAI) cases. By 2024, even amid stricter regulatory scrutiny, inspections declined to 206, with OAI cases dropping to 14 and VAI to 115.
This steady decline in adverse findings reflects India’s improving compliance and greater alignment with global quality standards in pharmaceutical manufacturing.
Despite overall improvements in regulatory compliance, recent recalls by Indian pharmaceutical companies highlight persistent gaps in adherence to Current Good Market Practices (CGMP) standards:
● Glenmark Pharmaceuticals is recalling over 25 products from the US market, including Propafenone ER capsules and Solifenacin tablets, due to CGMP deviations. The Class II recall was initiated on March 13, 2025.
● Sun Pharma is recalling 13,700 bottles of Gabapentin capsules over cross-contamination concerns. This Class III recall began on March 4, 2025.
● Zydus Pharmaceuticals recalled 3,144 bottles of Chlorpromazine tablets due to the presence of an impurity above recommended limits. This Class II recall was initiated on April 3, 2025.
India’s pharmaceutical sector is at a pivotal juncture, with multiple opportunities to expand and diversify its global presence. The shift towards high-value sectors like APIs, biosimilars, and generic formulations, coupled with the growing role of Contract Development and Manufacturing Organizations (CDMOs) and Contract Research Organizations (CROs), is fueling innovation and positioning the country for future growth. Leveraging global supply chain shifts, especially the reduced reliance on China, and capitalizing on initiatives like “Make in India” and the Production Linked Incentive (PLI) scheme, India is well-poised to become a more resilient and competitive player in the global pharmaceutical market.
In addition, India’s expanding biotech and biopharma capabilities, supported by increasing private equity and venture capital investments, are ensuring that the sector remains innovative and globally competitive. The government’s continued support through PLI schemes and R&D investment will further bolster this growth trajectory.
Strategic moves are essential to fully capitalize on the current geopolitical situation, particularly the ongoing US-China trade tensions. India must focus on expanding its presence in areas where China currently holds a dominant market share, especially in APIs and other key pharmaceutical products. By doing so, India can transform its role from a backup supplier to a key strategic partner in the global pharmaceutical ecosystem.
However, challenges remain, particularly with regulatory pressures and the need for consistent, transparent policies to ensure sustained growth. India’s ability to maintain its trusted reputation with regulators and international buyers will be crucial in this competitive landscape.
During BTA talks, India needs to focus on this issue in particular. Strengthening regulatory collaboration and ensuring faster resolution of compliance issues could be a focus area in trade discussions. Trade discussions could focus on facilitating joint initiatives to boost trust, including harmonized quality standards and bilateral pharma cooperation frameworks.
Moreover, the balance between innovation and access in pharma remains delicate. Issues related to patent linkage, data exclusivity, and evergreening practices can limit the ability of Indian generic companies to bring affordable alternatives to market. Trade talks could explore ways to protect public health interests while respecting intellectual property norms.
US buyers are increasingly demanding greater transparency on ESG compliance. Indian firms will need to invest more in sustainable manufacturing practices to stay competitive. Trade talks could include mutual recognition of sustainability certifications to ease this burden.
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