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The proposed US tariff on Indian pharma is seen to create a complex landscape of both challenges and opportunities.
Till date Indian pharma is primarily generic drug driven with a handful of innovative products. Therefore, the proposed tariffs pose significant hurdles for Indian pharma, even as it opens up avenues for adaptation, resilience, and strategic growth.
Harish K Jain, president, Federation of Pharmaceutical Entrepreneurs (FOPE) and director, Embiotic Labs, stated, “President Trump government has now proposed a Reciprocal Tariff. Currently, US levies zero percent tariff as against India’s 10% tariff on imports. If reciprocal tariff is implemented, there will be pressure on margins for Indian pharma companies exporting to US since more often tariffs result into reduced transfer price. Generics are exported on thin margins which affects the bottomline growth of India’s MSMEs (micro small medium enterprises). The reality is US healthcare is heavily dependent on Indian generics and there is no alternative to India since we have highest number of US FDA approved plants. Therefore, a pragmatic approach from both countries is much-desired.”
US tariffs are aimed at improving domestic manufacturing. Unlike other industries, pharmaceutical manufacturing is complex and cost-sensitive. While US may try to incentivize domestic production, it will take years before it can significantly replace Indian imports. In the short term, reciprocal tariffs are likely to hurt American consumers more than Indian pharma. Another is training a qualified workforce is a long process for US. Here India stands tall as a global pharma power house. India’s PLI scheme boosted domestic manufacture of bulk drugs including Clavulanic acid & other intermediates which were import dependent. This Indian pharma example is a solid negotiating tool for our government, he added.
Pharma imports from the US are relatively small compared to India. This creates an imbalance that makes reciprocal tariff policy difficult to justify. India can also consider zero tariff on US imports. Potential surge in US imports is possible and price reduction of high value patented drugs for Indian patients becomes affordable. From an India stand, encouraging domestic manufacture of patented drugs will be strategic, pointed out Jain.
From a long-term perspective, it is time India moves up the value chain and focus on innovation and research. Here the recent Union government’s Promotion of Research & Innovation in Pharma MedTech Sector (PRIP) should be maximised. Emphasis should be on novel dosage forms, NCEs, NBEs, biosimilars, biopharmaceuticals, process chemistry etc. Indian pharma should aggressively set up production plants globally to insulate it from the ever increasing protectionist policies globally, said Jain.
Noting that US tariff imposition will see cost of imported medicines increasing, Kaushik Desai, pharma consultant, said, “This will ultimately be passed on the consumers. It is a tricky situation and depends upon how US insurance lobby acts on price increase. IPA suggested zero duty on import of oncology and rare diseases which has minimal impact but will have positive impact in India”.
Jatish Sheth, co-chairman-nominated, KDPMA and director Srushti Pharma said, “Apprehensions of President Trump imposing tariff is quite palpable. Tariffs probably may be only a threat and could be reversed. Also, health insurance companies play a big role on medicine reimbursement costs in the US. Therefore, it is not easy for US to impose tariffs on India. Even if tariffs are imposed it might be reversed like in the case of Mexico. There will be negotiations. All said, it’s a cause for concern with a potential for a larger threat. Right now it is a wait and watch situation.”
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