The domestic pharmaceutical industry will have no choice but to increase prices of products meant for the US market if the Trump administration goes ahead and enforces up to a 200% import tariff, sources said. US President Donald Trump has said the country will impose tariffs on pharmaceutical imports and on copper. He noted that the tariff on pharmaceuticals could go up to 200%.
"It is still an evolving situation. We think that it (tariff) cannot be that much because it would also increase the cost for buyers in the US. In the worst-case scenario, if it happens, then we will have to increase the prices accordingly, we don't have a choice there as we operate on low margins," a senior industry executive said.
Smaller drug firms operating on thin margins can face severe pressure, potentially forcing consolidation or closure, he noted.
India currently levies around 10% import duty on American drugs, while the US doesn't charge any import duty on Indian drugs.
Icra Vice President & Sector Head Deepak Jotwani said the US is a key market for most Indian pharma companies, accounting for 30-40% of their total revenue.
"Imposition of high tariffs by the US administration on pharmaceutical imports could have an adverse impact on the Indian pharma industry as some increase in costs may need to be absorbed by the companies," he added.
Indian pharma companies largely export generics to the US market, which is already subject to a high competitive intensity, he added.
Imposition of high tariffs could weigh on Indian pharma export growth and profitability, he stated.
"That said, the US has a high dependence on Indian pharma for generics and a tariff shock could result in healthcare cost inflation and even shortages," Jotwani said.
Further, Indian pharma companies may need to look to accelerate their diversification efforts and increase focus on other geographies.
Indian pharmaceutical companies supply a substantial proportion of drugs to US residents, with four out of ten of all prescriptions filled in the US in 2022 being supplied by Indian companies.
As per industry sources, overall, medicines from Indian companies provided $219 billion in savings to the US healthcare system in 2022 and a total of $1.3 trillion between 2013 and 2022.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
