U.S. to see higher generic drug prices thanks to tariffs, CEO of leading India pharma firm warns - CNBC

What the report says

CNBC reported that Erez Israeli, chief executive of Indian pharmaceutical company Dr. Reddy’s Laboratories, warned that President Donald Trump’s planned tariffs on imported generic drugs would likely raise medicine costs for U.S. patients. Speaking to CNBC’s “Inside India” on Thursday, Israeli said generic medicines operate on narrow margins and that tariffs at the proposed levels could not realistically be absorbed by manufacturers, meaning price increases would likely track the size of the levy.

According to CNBC, Trump announced Tuesday that imported generic drugs would face no tariff for two years from Aug. 1, followed by a 100% duty in August 2028 and a 200% duty a year later. The policy is intended to encourage production of generic medicines in the United States. CNBC noted that generics account for more than 90% of U.S. prescriptions, while data cited from the Indian Pharmaceutical Alliance indicates Indian companies supply nearly half of U.S. generic drugs.

Israeli said shifting Dr. Reddy’s generic portfolio to U.S. manufacturing would take an estimated four to seven years, suggesting the two-year grace period may not be enough. He also said U.S. generic sales now represent 27% of Dr. Reddy’s total sales, down from about half several years ago, and could fall below 25% this year as other businesses grow faster.

The issue matters because generics are central to keeping prescription costs down. CNBC also cited industry concerns that U.S. production may be economically difficult for low-margin medicines, while brokerage Nomura said the tariffs could give manufacturers room to raise prices.