Hyderabad, Visakhapatnam: A seismic shift in global trade rocked India’s pharmaceutical heartland today as U.S. President Donald Trump’s new 100% tariffs on branded and patented drugs, effective October 1, sent shockwaves through Telangana and Andhra Pradesh. These Telugu states, which power 40-50% of India’s $27.9 billion pharma exports, face immediate market tremors and a looming threat: the potential expansion of duties to complex generics, biosimilars, and specialty medicines. With $2.5 billion in annual U.S. shipments at stake, Hyderabad’s Genome Valley and Visakhapatnam’s Pharma Park are scrambling to adapt, as stock markets signal a turbulent road ahead.
The announcement, posted on Trump’s Truth Social platform, targets “any branded or patented Pharmaceutical Product” unless the importing company breaks ground on a U.S. manufacturing facility. While Indian firms, which supply over 40% of U.S. generic prescriptions, breathed a sigh of relief at the generics exemption, the fine print has Wall Street and Hyderabad’s Genome Valley on edge. Complex generics, biosimilars, and specialty medicines—high-margin segments where Telugu companies like Dr. Reddy’s Laboratories and Aurobindo Pharma dominate—could face scrutiny under future expansions, echoing Trump’s earlier threats of tariffs as high as 250%.
Immediate Fallout: Markets Tank, Supply Chains Scramble
The tariff news hit markets hard. India’s Nifty Pharma index dropped 2.2%. The Sensex fell 787 points and the Nifty 50 lost 248 points, marking six days of declines. Sun Pharmaceutical, a major Hyderabad firm, saw shares fall 2.91%. Cipla dropped 2.1%, Dr. Reddy’s fell 1.57%, Lupin declined 2.15%, Zydus Lifesciences fell 3.71%., Natco Pharma lost 3.2%, and Laurus Labs dropped 2.8%. Investors worry about supply chain issues. Firms are rushing to stockpile shipments at U.S. ports before October 1.
The Real Risk Ahead!
Telangana, funneling $2 billion to the U.S. (23% of India’s $8.7 billion FY24 total), and Andhra Pradesh, with $500 million (6%), are uniquely exposed. These states dominate complex generics (25-35% of Telangana’s U.S. exports) and biosimilars, where margins of 10-20% dwarf the 5-10% of simple generics. “The exemption is a breather, but it’s temporary. If complex generics get hit, we’re looking at $300-500 million in lost revenues by March 2026,” warned an official in Hyderabad.
Revenue Losses: A 100% duty would raise prices 30-50%, cutting U.S. demand by 15-25%. Telangana faces a $300-500 million hit, Andhra $50-100 million in 2026, eroding 5-10% of export revenues.
Employment Risks: Up to 70,000 jobs in Telangana (R&D, formulation) and about 20,000 in Andhra Pradesh (API-focused) could be lost, per India Ratings.
Supply Chain Disruptions: Vizag’s API plants, reliant on Chinese intermediates, could see 20% cost increases, delaying launches like insulin glargine (projected $200 million market).
Importance of Pharma Sector for Telugu States
The Telugu states’ pharma sector plays a vital role in their economies, though its direct contribution to GSDP remains modest amid broader service and agriculture dominance. Life sciences sector, of which the pharma industry is a major component, accounts for a significant portion, making up 12% of Telangana GSDP.
In Telangana, the industry—centered in Hyderabad—generated approximately ₹37,000 crore in exports in FY24, contributing 31% to the state’s total merchandise exports. It employs over 3 lakh people directly and supports an additional 5-6 lakh indirectly through ancillary activities like logistics and packaging.
In Andhra Pradesh, the emerging Vizag cluster and other pharma hubs drive around $0.5 billion in annual exports, with the sector contributing roughly 2-3% to the state’s ₹16 lakh crore GSDP and supporting about 1 lakh jobs. The U.S. market absorbs 40-50% of these states’ pharma output, where firms like Hyderabad-based Dr. Reddy’s and Aurobindo Pharma are key players in generics and biosimilars.
In Genome Valley, home to over 200 companies and dozens of FDA-approved plants, industry leaders reported “deep concern” among 25,000 employees. “Our Bio-similar facilities are labor-intensive, with 800-1,200 skilled workers per plant,” noted a Hetero Drugs spokesperson.
Reduced U.S. demand could force production cuts by year-end. Visakhapatnam’s API hubs, already hit by a 3% capacity loss from Aurobindo’s Unit-IV fire, face added pressure as 70% of raw materials come from China, now under 104% U.S. tariffs.
