Dr. Reddy's Warns 200% Trump Tariffs Will Double U.S. Generic Drug Prices
Updated
Updated · CNBC · Jul 24
Dr. Reddy's Warns 200% Trump Tariffs Will Double U.S. Generic Drug Prices
3 articles · Updated · CNBC · Jul 24
Summary
Dr. Reddy's CEO Erez Israeli said U.S. patients will bear higher generic drug costs because tariffs on these low-margin medicines cannot be absorbed and prices will rise roughly in line with the levy.
Trump's plan gives imported generics a zero-tariff window for two years from Aug. 1, then imposes a 100% tariff in August 2028 and 200% a year later to push manufacturing back to the U.S.
Four to seven years may be needed to shift production to the U.S., Israeli said, making the two-year grace period too short and leaving onshoring uneconomic for cheap medicines.
Indian manufacturers supply nearly half of U.S. generics, and industry groups plus Nomura say producers are unlikely to relocate because U.S. costs are too high, though higher tariffs could let them raise prices and margins.
For Dr. Reddy's, U.S. generics now make up 27% of sales, down from 50% a few years ago, and Israeli said that share should fall below 25% this year as other businesses grow faster.