Trump's Drug-Price Order Won't Impact Indian Pharma Companies: Kiran Mazumdar-Shaw

President Donald Trump's decision to make drugmakers reduce the prices of medicines sold in the US and align them with the lowest prices abroad will not impact Indian pharmaceutical companies, according to Kiran Mazumdar-Shaw, executive chairperson of Biocon Ltd.

"Trump is only looking at developed-world-reference pricing. He is not looking at developing-world-reference pricing," Mazumdar-Shaw told NDTV Profit in a conversation on Tuesday. "He's not calling out India."

Active pharmaceutical ingredients are among India's key pharma exports and they will not fall under the reference pricing, she said. "So I am not concerned about it impacting Indian pharmaceutical companies in any way."

The reference pricing means the policy of aligning the US pharmaceutical prices with those in the developed parts of the world.

Trump issued an executive order on Monday, directing drugmakers to lower the prices of medicines to align with what other countries pay. He said the government would impose tariffs if the prices in the US did not match those in other countries and said he was seeking cuts of between 59% and 90%.

Asked why firms like Biocon would be insulated from the measure, Mazumdar-Shaw underlined that the company supply biosimilars and generics, and these products come under the Affordable Care Act. "Secondly, our product pricing is almost uniform, whether it's in Europe or the US. So there's no kind of price differential between the markets we serve," she added.

It does not make sense for the US to bring back "commodity manufacturing" like generics into the US. Around 80% of prescriptions in the US by volume comprise generics. As they already have low prices, it will not be practical for the US to impose tariffs on the import of generics, according to Mazumdar-Shaw. "I believe that India will probably have a soft landing like the UK had, because I think it hurts them to increase generic pricing."

Mazumdar-Shaw said that reference pricing had been a concern for Trump and that he had introduced it in his first term. She explained that the target of Trump's decision was "Big Pharma", a reference to big and major pharmaceutical companies.

Big pharma has subsidised or cross-subsidised US pricing with the European pricing. Trump also called out the middleman like the pharmacy benefit manager and the wholesalers, who also basically keep drug pricing up, Mazumdar-Shaw explained. "Despite the discounting that happens on drugs, patients have to pay a lot more. He's trying to attack this in a two-pronged way," she added.

Trump essentially wants to "equalise" drug prices between the US and the developed world. The administration has given examples of how the same product is priced 80% to 90% lower in Europe or Australia compared to the US, Mazumdar-Shaw said.

She said Trump's move does not affect "generics or biosimilars by any stretch of imagination". That's because these products are sold to the US at the lowest cost. Instead, it targets innovator drug pricing. She added that the manufacturing of innovator drugs shifted to Europe and China, and Trump wants to bring it back to the US. 

An innovator drug refers to a drug that is the first of its kind to contain an API and has received approval for being sold. The company that makes an innovative drug has the exclusive right to sell the drug till its patent expires. After that, other companies can sell generic versions of the drug.

Biocon is expanding its US footprint to align with the emerging trends. It has acquired a solid dosage facility in New Jersey and a biologics plant in Baltimore through its subsidiary Syngene, she said.

Mazumdar-Shaw added that the company recently partnered with Civica to manufacture insulin analogues in the US. "We will invest in very measured ways to make sure that we play very strongly in that market."