With US tariffs on generic medicines now on a timetable, India’s drugmakers are accelerating a long-discussed pivot towards Europe, Latin America, Africa, Southeast Asia and the Gulf. The opportunity is real. So are the regulatory mazes and commercial risks.
The deadline that changed the conversation
For two decades, the United States has been the engine of Indian pharmaceutical exports. India exported pharmaceuticals worth about 25.8 billion US dollars in 2025, and roughly 37.7 per cent of that, about 9.7 billion dollars, went to the US, according to analysis by the Global Trade Research Initiative (GTRI). Indian manufacturers supply close to half of all generic prescriptions dispensed in America.
That dependence now carries a date-stamped risk. On 21 July 2026, US President Donald Trump announced that imported generic medicines would continue to enter tariff-free for two years from 1 August 2026, after which they would face a 100 per cent tariff for a year and 200 per cent from August 2029, unless manufacturers establish production in the United States. The announcement followed tariffs of up to 100 per cent imposed from 2 April 2026 on certain branded medicines and key pharmaceutical ingredients.
Industry reaction has been measured rather than panicked. The export promotion council Pharmexcil described the two-year window as time to diversify. Analysts note that even with a 100 per cent tariff, many low-cost generics would still be cheaper than branded alternatives, so much of the cost could fall on US insurers and patients rather than eliminating Indian supply. Several Indian majors, including Sun Pharma, Zydus, Lupin, Aurobindo, Cipla and Dr Reddy’s, already operate US plants. Few expect a rush to relocate production.
Where the growth is coming from
Diversification is already visible in the data. Pharmexcil reports that exports to Europe grew 21 per cent in April–May of FY27 compared with a year earlier, with the region now accounting for more than a fifth of India’s pharma exports. Exports to Latin America and the Caribbean grew nearly 24 per cent over the same period, reaching close to 8 per cent of the total.
Each region offers a different proposition. Latin America, led by Brazil and Mexico, has large public health systems and growing demand for affordable generics and biosimilars. Southeast Asia combines rising incomes, ageing populations and increasingly harmonised regulation through ASEAN. The Middle East and North Africa, particularly the Gulf states, offer high-value markets with strong purchasing power and government-led procurement. Africa remains a large market for essential medicines, often supplied through tenders and donor-funded programmes.
The regulatory maze
Entering these markets is not simply a matter of shipping product. Every major market has its own regulator, dossier requirements and inspection regime. Brazil’s ANVISA, Mexico’s COFEPRIS and Saudi Arabia’s SFDA are respected but demanding agencies, and approval timelines can stretch for years. Many require local clinical or bioequivalence data, product registration through a local entity, and good-manufacturing-practice (GMP) inspections of Indian plants.
Biosimilars pose the stiffest test. Unlike small-molecule generics, they require extensive analytical characterisation to demonstrate similarity to the reference biologic, often supported by clinical data. Regulators differ in what they accept, which means a single global development programme rarely suffices. Companies that invest early in strong analytical comparability packages, using advanced mass spectrometry, chromatography and bioassays, gain a lasting advantage.
Biosimilars are also where the commercial prize is largest. As patents on major monoclonal antibodies and other biologics expire, governments in Latin America, the Gulf and Southeast Asia are keen to cut spending on expensive originator products. Indian biosimilar developers with established approvals in Europe or other stringent markets can use those approvals, and the supporting data, to accelerate registration elsewhere through reliance pathways, in which one regulator draws on the assessment of another. Reliance and abridged pathways are spreading, particularly in the Gulf and Southeast Asia, and companies that already hold European approvals are best placed to benefit.
India’s own regulatory upgrade helps. Revised Schedule M GMP requirements, aligned more closely with WHO standards, are raising the baseline for manufacturers of all sizes. Membership of the Pharmaceutical Inspection Co-operation Scheme (PIC/S) and WHO prequalification remain valuable passports into tender-driven markets.
Managing commercial risk
New markets bring new risks. Currency volatility has hurt exporters in several Latin American and African economies. Payment delays from public purchasers can strain working capital. Price controls and reference pricing compress margins, and some Gulf states are pushing local manufacturing, favouring companies that partner with or build in-country plants.
Successful companies are responding with a mix of strategies: licensing and distribution partnerships with local firms, joint ventures for local fill-finish or packaging, selective acquisitions to gain registrations quickly, and portfolio choices that prioritise complex generics and speciality products where competition is thinner.
Timing is the hidden cost. Registrations in new markets often take two to four years, and the investment in dossiers, local studies and inspections is incurred long before the first sale. The two-year US tariff window is therefore shorter than it appears: companies that have not already filed in their target markets will struggle to generate meaningful revenue there before the tariffs bite.
The China factor
Diversifying destinations addresses only half of India’s exposure. Indian manufacturers still import more than 60 per cent of their active pharmaceutical ingredients and key starting materials from China, according to industry estimates. A trade shock on the supply side could hurt more than one on the demand side. The production-linked incentive schemes for bulk drugs aim to rebuild domestic API capacity, but progress is uneven.
A strategy, not a reaction
The US will remain India’s most important single pharmaceutical market for years. The lesson of 2026 is not to abandon it, but to stop depending on it so heavily. A balanced export map, backed by world-class quality systems and resilient supply chains, is what will keep India the pharmacy of the world.
