Indian Pharma Giants Face Uncertainty as Trump Proposes 25% Import Tariffs
Indian pharmaceutical companies with significant exposure to the US market are bracing for potential disruption as former US President Donald Trump plans to impose a 25% or higher tariff on pharmaceutical imports. This move could have far-reaching implications for India’s thriving generic drug industry, which considers the US its largest export market.
Key points:
- Trump announced his intention to levy “25 per cent or higher” tariffs on pharmaceutical imports, potentially starting in April 2025.
- Indian drugmakers exported $8.7 billion worth of pharmaceuticals to the US in fiscal 2024, accounting for about 31% of the industry’s overall exports.
- Nearly half of all generic prescriptions filled in the US in 2022 were supplied by Indian drugmakers, generating $408 billion in savings for the US healthcare system.
- Major Indian pharmaceutical companies like Sun Pharmaceutical, Dr. Reddy’s, Cipla, and Zydus Lifesciences have significant exposure to the US market.
- Sun Pharmaceutical, India’s largest drugmaker, derived 32% of its total revenue from the US market in fiscal 2024.
While the proposed tariffs pose a significant challenge, some industry experts believe the impact may be mitigated by factors such as:
- The US’s heavy dependence on pharmaceutical imports, particularly for generic drugs and active pharmaceutical ingredients (APIs).
- The potential for bilateral talks between India and the US to address the issue.
- The competitive advantage of Indian pharma companies in terms of quality and affordability.
However, concerns remain about the potential inflationary effect on US drug prices and the impact on Indian pharma companies’ profitability. Sun Pharma’s Managing Director Dilip Shanghvi has already indicated that any additional tariffs would likely be passed on to consumers.
As the situation develops, Indian pharmaceutical companies and industry bodies are closely monitoring the situation and hoping for a resolution through diplomatic channels.
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Sources:1 https://www.tribuneindia.com/news/business/indian-drugmakers-likely-to-be-hit-as-trump-plans-25-import-tariffs/3 https://www.cnbctv18.com/world/trump-tariffs-india-us-pharma-auto-tesla-elon-musk-19561705.htm5https://think.ing.com/snaps/trump-wto-tariffs-us-pharma/7 https://www.business-standard.com/industry/news/indian-drugmakers-bank-on-bilateral-talks-for-relief-from-us-tariffs-125022000543_1.html
