Trump Exempts Generic Drugs from Pharmaceutical Tariffs, Boosting Indian Pharma Stocks

President Donald Trump’s administration has exempted generic drugs from its pharmaceutical tariff policy, according to reports emerging this week. The decision provides significant relief to India’s pharmaceutical industry, which supplies approximately 35% of ingredients used in generic drugs consumed in the United States. Nearly 20% originate from the European Union, while the U.S. produces only 12%.

Indian Pharmaceutical Stocks Rally on Exemption News

Major Indian pharmaceutical companies saw their stock prices surge following confirmation of the generic drug exemption. Aurobindo Pharma gained 4.15%, Lupin rose 3.75%, and Cipla climbed 2.25% on October 9 (Source: India Today). The positive market response reflects investor confidence that these companies’ core business operations will remain largely unaffected by U.S. trade policy changes.

The exemption is particularly consequential given India’s dominant position in the global generic drug market. Indian pharmaceutical companies have built extensive manufacturing and distribution networks focused on affordable generic medications for the U.S. market. 

Policy Comes After Months of Trade Uncertainty

This news comes after significant policy fluctuations regarding pharmaceutical tariffs throughout 2025. The Trump administration previously announced plans for a 100% tariff on branded pharmaceutical imports set to take effect October 1. That aggressive stance prompted immediate concern from pharmaceutical manufacturers, healthcare providers, and policy experts about potential supply chain disruptions and drug price increases.

In a subsequent reversal, the administration delayed the 100% pharmaceutical tariffs to allow time for bilateral pricing negotiations with major drug-exporting countries. Previous to this news, the U.S. and European Union reached a trade agreement capping pharmaceutical tariffs at 15%, averting the threatened higher levies on trans-Atlantic pharmaceutical trade.