A visitor walks next to the logo of Indian multinational pharmaceutical company Dr. Reddy’s Laboratories during the BioAsia 2026 Summit in Hyderabad, Telangana, India, on February 18, 2026. (Photo: Jwala Kotesh/NurPhoto, Getty Images)
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Erez Israel, chief executive officer of Indian pharmaceutical company Dr. Reddy’s Laboratories, told CNBC’s “Inside India” on Thursday that U.S. President Donald Trump’s proposed tariffs on generic drugs would increase the price of generic drugs for patients in the country.
The Israelis said generic drugs are a low-margin business and the company “cannot absorb this kind of tariff,” adding that it would lead to price increases “on the scale of the tariff.”
The Israelis also said two years may not be enough for companies to move operations to the United States, saying the process could take four to seven years.
On Tuesday, President Trump announced that generic drugs imported into the United States would have zero tariffs for two years starting August 1, after which 100% tariffs would go into effect in August 2028, rising to 200% a year later.
The move is aimed at reshoring the generic drug industry, which accounts for more than 90% of prescriptions, to the United States.
Indian companies account for almost half of the generic drug supply to the United States, according to data shared by lobbying group Indian Pharmaceutical Alliance. But even though the U.S. is an important market, industry representatives say generic companies will not be able to absorb 100% to 200% of the tariffs.
“Currently, we are operating on very thin margins,” Indian Pharmaceutical Export Promotion Council Chairman Namit Joshi said in an interview with ANI on Wednesday.
In an interview, Dr. Reddy’s CEO emphasized that generic drug sales to the United States now account for only 27% of the company’s total sales, down from 50% a few years ago. He said growth would be below 25% this year as growth in other sectors accelerated.
Tariffs are unlikely to drive generic drug companies to the U.S., since it’s not practical to make these low-margin products in a country where production costs are higher than India.
“Surgeries in India by us and other companies have significantly reduced health care costs in the United States,” the Israeli said.
Global brokerage firm Nomura agreed, saying in a note on Wednesday that Indian companies are unlikely to move generic drug manufacturing to the United States because it is “less economically viable,” but said tariffs could allow manufacturers to increase prices and improve profits.
