Tariff on pharma: U.S. President Donald Trump on Tuesday announced plans to impose a "small tariff" on pharmaceutical imports, with a phased increase to 150 per cent within 18 months and a final hike to 250 per cent. While the initial rate was not specified, the move is aimed at stimulating domestic pharmaceutical manufacturing in the United States.India, one of the largest suppliers of generic medicines to the U.S., is expected to be significantly impacted. According to the Times of India (TOI), India exports approximately USD 9 billion worth of generic drugs annually to the U.S., primarily in the low-complexity generics segment. In total, Indian drug exports to the U.S. exceed USD 10.5 billion.The U.S. heavily relies on Indian pharmaceutical companies, sourcing nearly half of its generic drug needs from the country. To maintain access to this critical market, Indian pharma firms invest close to USD 1 billion annually in operating and upgrading U.S. FDA-approved facilities and complying with stringent audit requirements.Industry experts caution that profits for Indian pharmaceutical firms may decline, and research and development may stagnate. However, for the medical devices sector, as long as the gap between duty on China and India is over 15- 20 per cent, there are positive prospects for exports to the US, according to Press Trust of India (PTI).Despite these headwinds, Indian pharmaceutical companies have played a vital role in reducing U.S. healthcare costs. Medicines supplied by Indian firms generated an estimated USD 219 billion in savings for the U.S. healthcare system in 2022 alone, and over USD 1.3 trillion between 2013 and 2022, according to PTI.Leading Indian pharma companies such as Sun Pharma, Dr. Reddy’s Laboratories, Cipla, Lupin, and Ipca Laboratories generate a significant share of their revenues from the U.S. market. Sun Pharma derives 30 per cent of its global revenue from the U.S. and operates through multiple entities, including its subsidiary Taro Pharmaceuticals. Its U.S. expansion strategy has included key acquisitions such as Caraco, DUSA Pharmaceuticals, and Pharmalucence.
Tariff on pharma: Donald Trump's new drama! Will it impact Indian companies?
