Amid Air of Uncertainty with Tariffs, Indian Pharma Firms May Look at More Third-party Manufacturing

Indian pharmaceutical companies are likely to drive more third-party manufacturing and geographical diversification amid uncertainty around US tariff policies, industry insiders and analysts aware of the matter said.

US President Donald Trump announced a 100 per cent tariff last week on f branded and patented drugs being imported into the country

Last week, US President Donald Trump announced a 100 per cent tariff on imports of branded and patented drugs into the country. The pharmaceutical firms that have already begun construction of plants in the US may be exempted from these levies, Business Standard reported.

Among Indian companies, the one company that has significant US exposure is Sun Pharmaceutical Industries. In FY2025, among their reported $1.22 billion global sales from patented products, America accounted for about $1.1 billion — roughly 17 per cent of total revenue.

According to the HSBC Global Investment Research, Sun Pharma’s patented products are largely manufactured by global contract development and manufacturing organisation (CDMO) partners. In case of Ilumya, the company’s largest patented drug that contributes about 56 per cent of total patented sales in FY25 — the drug substance is made in South Korea and the finished dose in Europe.

Analysts point out that while the tariff move is broadly negative for Sun, the effect will depend on factors such as supply chain spread, intellectual property (IP) location, and CDMO arrangements.

“In the worst case, Sun would have to shift manufacturing to CDMO partners with US plants or transfer products to its three facilities in the US. It could also announce new capex or acquire a plant in the US, with over $3 billion cash available as of June 2025,” HSBC analysts told BS.

In terms of industry-wide impact, a CEO of a drug exporter to the US said his firm has already explored fill-finish work at American CDMOs. “So far, generics have remained unaffected, but the sword hangs. We’ve opened talks with US CDMOs and can shift some manufacturing if needed. However, the cost arbitrage would vanish — it’s a tough call for both us and the US administration,” he noted.

As per a BCG-IPSO whitepaper that highlighted India’s advantages, CDMOs enjoy 70–80 per cent workforce cost benefits and 85 per cent lower infrastructure costs compared to the West, underscoring the long-term competitiveness of Indian manufacturing.

Many other Indian pharma companies — including Biocon, Aurobindo, Dr Reddy’s Laboratories, Glenmark, Lupin and Sun Pharma — already operate US facilities. In addition to that, CRDMOs such as Piramal Pharma, Syngene and Sai Lifesciences also have a presence.

Piramal Pharma has begun expanding its sterile injectable facility in Lexington, US.  In July, the company said, “This will support our antibody drug conjugate (ADC) programme over the medium to long term.” ADCs are targeted cancer therapies designed to deliver chemotherapy directly to tumour cells.

Speaking to Business Standard, Nandini Piramal, Chairperson of Piramal Pharma said that demand for fill-finish capacity in the US is rising. “We are adding 24,000 sq ft of manufacturing space and a new laboratory, to be completed by 2027, for high-potent sterile products. Some customers had to move elsewhere due to lack of capacity, so this expansion is crucial,” she said. Currently, their firm operates 15 CDMO facilities globally, including four in North America, two in the UK and nine in India.