Kamal Ghorui
NEW DELHI: Domestic drugmakers are set to gain clarity under the proposed India-US trade agreement, sharpening expansion plans in the world’s most lucrative pharmaceutical market. While the sector was insulated from punitive US tariffs, the generics business of major companies including Sun Pharma, Dr Reddy’s and Cipla faced significant headwinds in the third quarter ended Dec 2025 amid intensifying competition and price erosion in that market. With the US accounting for nearly 35% of India’s overall pharma shipments of over $30 bn in FY24-25, the move is expected to bolster growth prospects and pipeline visibility. A potential India-US trade deal offers long-awaited stability for the domestic pharma sector which plays a critical role in supplying affordable medicines to the US, industry experts told TOI. Kartik Jain, Partner, JSA Advocates & Solicitors said “The move strengthens India’s competitive position vis-à-vis other exporting jurisdictions facing higher tariff barriers. From a legal and commercial perspective, however, until the detailed text and implementation framework are released, Indian companies will need to carefully assess how these commitments translate into actual commercial and regulatory benefits.”Reacting to the development, major pharma stocks echoed a positive trend on Tuesday led by Sun Pharma ( up by over 4%), amid a broader rally in the BSE Healthcare Index.“Pharma generics was hitherto left outside the tariffs. The FTA now provides clarity on that. This will help domestic generic companies with their US plans”, Sujay Shetty, global health industries advisory leader, PwC India said. Over the past few months, companies have been recalibrating their US strategy and pipelines to mitigate any potential risk.Recently, Sun Pharma reported a decline in generic sales to the US during Q3 ended Dec’25, which was offset by high-value specialty/ innovative drug sales. “Equally, this strengthens India’s role in resilient supply chains with a predictable and positive moving tariff headline”, according to Ayush Mehrotra, Partner, Khaitan & Co. “Pharmaceuticals were kept outside the scope..Beyond tariffs, the sector’s long-term growth will continue to hinge on regulatory compliance, timely FDA approvals, and resilient supply chains’, Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat noted. Analysts say the proposed reduction in tariffs will not only make Indian exports more competitive in the US markets but also trigger a chain reaction of positive developments. “This is a high-impact development and will have a multi-layered positive effect on the Indian economy, prevailing market sentiments, and sectors exporting to the US, which will benefit from better competitiveness”, an analyst from Motilal Oswal said.
