India puts big pharma concessions on table as US trade deal nears finish line
India’s offer comes in the backdrop of the US administration’s stated desire to sharply reduce local drug prices, and gains significance considering every second prescription in the US has a generic drug made by an Indian company.
New Delhi: As the trade deal negotiations between India and the US move towards finalisation, the pharmaceutical sector is at the heart of a significant give-and-take between the two countries.
According to two people familiar with the matter, India’s proposals include supply of low-cost complex generic medicines at sharply reduced costs, patent reforms to allow earlier entry of generics in the US, increased US-based manufacturing by Indian pharma firms of active pharmaceutical ingredients (APIs) and fixed dosage forms (FDFs), and tariff exemptions for life-saving and critical medicines imported into India from the US.
An API is the main component of a drug (think paracetamol), while an FDF is a combination of two or more APIs in a single drug, such as a tablet that contains both paracetamol and ibuprofen.
India’s offer comes in the backdrop of the US administration’s stated desire to sharply reduce local drug prices, and gains significance considering every second prescription in the US has a generic drug made by an Indian company.
Amid the US push to bring pharmaceuticals under its reciprocal tariff regime, India has proposed to supply complex generic medicines at 20-25% of current branded prices for the first three years after patent expiry. An additional 10-15% cost reduction will follow over the following seven years, the people cited above said on the condition of anonymity.
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“Along with the pricing commitment, India has proposed allowing final stages of drug processing—including semi-finished and finished dosage forms—to be done in the US under the Trump administration’s ‘Make in America’ push," said the first person cited above. “In return, India has sought targeted incentives for its pharma firms willing to set up API and formulation facilities in the US."
Other countries are reluctant to invest in US-based manufacturing of low-cost generics unless the products are high-value or there’s a supply gap. “India has effectively mastered this space," this person said.
The second person said that in patent reform, Indian negotiators have suggested an end to “evergreening" by US pharma companies and a reduction in patent exclusivity from India’s end—steps they claim would significantly lower drug costs.
Patent “evergreening" is the alleged practice of filing for new patents on secondary features of a pharmaceutical as earlier patents expire, thereby extending effective patent exclusivity past the original 20-year term.
Currently, Indian patent law—under Section 3(d) of the Patents Act—already places restrictions on evergreening, but India has now proposed tightening these provisions further while also reducing the duration or scope of exclusivity granted to new drug patents, to speed up the availability of generics.
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“India has also proposed tariff exemptions for life-saving and critical drugs with thin margins, and called for greater transparency and public access to US export-import data," the second person said.
To be sure, a high-level Indian delegation led by chief negotiator Rajesh Agarwal, additional secretary, ministry of commerce, returned from Washington on Sunday night after what officials described as a positive round of talks. As reported by Mint on 16 May, the first tranche of the bilateral trade agreement (BTA) is expected to be finalised before 8 July—the date that marks the end of the 90-day pause on US President Donald Trump’s reciprocal tariffs.
Queries sent to the commerce ministry and industry association Pharmexcil remained unanswered till press time. A US Embassy spokesperson said, “We do not comment on ongoing bilateral negotiations."
Expert views
India’s offer comes amid efforts by US President Donald Trump to rein in drug prices. On 21 May, Trump signed an executive order to cut prescription drug prices by up to 80% under the ‘Most Favored Nation’ rule, pegging US drug prices to the lowest globally.
“While this may benefit US patients, it could trigger global price realignment and pressure countries like India to raise prices by tightening patent laws through trade deals," said Ajay Srivastava, co-founder of a trade think tank Global Trade Research Initiative (GTRI).
“India has long resisted foreign pressure to amend its patent laws, but the India–UK FTA marked a shift, including provisions that go beyond TRIPS. This could lead to further concessions in EU and US talks, risking delayed generics and costlier medicines in the Global South," Srivastava said.
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TRIPS refers to the agreement on Trade-Related Aspects of Intellectual Property Rights, a WTO pact that sets minimum standards for protecting intellectual property, including patents, trademarks, and copyrights, across member countries.
“India must defend its patent regime, which ensures affordable access, prevents monopolistic extensions, and safeguards public health. The world depends on India’s generics. Preserving this model is both a national and global imperative," Srivastava added.
Biswajit Dhar, economist and trade expert from Delhi-based think tank, Council for Social Development said that with President Trump coming down heavily on American companies for selling high-priced medicines, his move to encourage imports of cheap generic products has created an opportunity for the Indian companies to expand their presence in the US.
“Indian companies must make the most of this opportunity," said Dhar. “They must utilise the PLI scheme fully to increase production of pharmaceutical products. Alongside, Indian companies must ensure that their products fully meet the stringent quality requirements of the US FDA."
Daara Patel, secretary general at the Indian Drugs Manufacturers’ Association (IDMS) said the US may not immediately need generic plants, but it is looking for API units. “The cost is very high to set up a unit in the US; they also want to save money," said Patel. “There is a wrong notion that they have an insurance scheme. Insurance also has limitations. They want goods at affordable prices from India or our support to produce in the US itself."
Generics powerhouse
India is a key supplier of generic drugs to the US, with $10.52 billion worth exports making their way to the US in FY25, as per Pharmexcil. Indian firms supply nearly 47% of the generics used in the US, underlining their crucial role in the American healthcare system.
Commerce ministry data shows the segment has grown steadily, with exports rising from $7.08 billion in FY22 to $7.55 billion in FY23, then sharply to $8.73 billion in FY24, and further to $10.52 billion in FY25.
The US pharmaceutical market was valued at $634.3 billion in 2024. India’s $10 billion contribution in generics helps the US save around $216 billion annually by potentially replacing expensive patented drugs, according to the Indian Brand Equity Foundation (IBEF), a commerce ministry body.
That means a huge $624-billion market opportunity is still available for India to step into. If the US decides to stop evergreening of patents, many patented drugs will fall into generics. If $400 billion translates from patent to generic from the $634 billion, this will add to the generic drug segment.
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