A complex global network underpins the production of many generic pharmaceuticals, illustrating the challenges of reshoring drug manufacturing to the United States. This dynamic is exemplified by the journey of a lifesaving central nervous system medication that starts in Digwal, India, travels approximately 8,000 miles to a facility in Riverview, Michigan, and undergoes final processing through collaboration between specialized laboratories in both countries.
The Indian-American pharmaceutical company Piramal illustrates this model, maintaining multiple manufacturing sites worldwide to leverage cost advantages and regulatory compliance. According to Piramal’s CEO Peter DeYoung, labor costs in the United States are significantly higher than in India, whereas material expenses dominate in India. This cost structure influences where various production stages are located, with India offering faster factory construction timelines and more affordable customized equipment compared to Germany or Austria.
The global supply chain for pharmaceuticals is also shaped by regulatory and safety considerations. Some medications require handling of hazardous or DEA-controlled chemicals, necessitating facilities in specific jurisdictions. For example, Piramal produces the generic anesthetic sevoflurane in both India and the United States to ensure consistent availability even amid supply chain disruptions.
The Indian pharmaceutical industry’s rise began in the 1970s, when the country prioritized affordable medication for its population by developing expertise in generic drug manufacturing. India’s earlier refusal to recognize drug patents allowed local companies to reverse-engineer medicines, fostering broad capabilities in producing complex drugs for Asia, Africa, and Latin America. After aligning its patent laws with World Trade Organization standards in 2005, Indian firms further expanded their global reach.
The Indian Pharmaceutical Alliance estimates that manufacturing most generic drugs in the United States would be at least four times more expensive than in India. Secretary General Sudarshan Jain highlighted that while the United States tends to move on after drug patents expire, Indian manufacturers continue refining production, benefiting from large-scale volumes and further cost efficiencies. Moreover, with approximately 55 major patents worth $300 billion due to expire in the U.S. over the next five to seven years, opportunities for Indian generics manufacturers are expected to grow.
Despite past quality control concerns in Indian manufacturing—most notably involving Ranbaxy in the early 2000s—leading Indian firms have improved regulatory compliance. Piramal reported undergoing more than 400 inspections since 2012, including 49 by the U.S. Food and Drug Administration (FDA), without serious violations detected. Dr. Reddy’s Laboratories also reported recent surprise FDA inspections following tariff announcements.
The Trump administration’s recent imposition of a 100 percent tariff on certain pharmaceutical imports exempted generic drugs, reflecting concerns from healthcare professionals and supply chain experts that taxing generics could increase costs, exacerbate drug rationing, and cause shortages. Proposals to impose tariffs are part of broader efforts to reduce U.S. dependence on foreign pharmaceutical supply chains, particularly focusing on reliance on China for active pharmaceutical ingredients, which India is seeking to counterbalance.
Industry leaders advocate cooperation between the U.S. and India to strengthen the pharmaceutical supply chain rather than pursuing isolationist policies. Mr. Jain emphasized that without collaboration, dependence on China will persist, and American buyers would benefit more from stocking medicines sourced from India than from domestic manufacturing at substantially higher costs.
The multinational nature of pharmaceutical production is further illustrated by routine product shipment patterns involving multiple countries and companies, underscoring that drugs marked as made in one country often cross several borders during manufacture. This complexity challenges simplistic notions of fully localizing pharmaceutical supply chains.