Indian Pharma Firms May Pass Tariff Burden To US Consumers

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 per cent

Icra Vice President & Sector Head Deepak Jotwani said the US is a key market for most Indian pharma companies, accounting for 30-40 per cent of their total revenue

Source : Getty

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 per cent 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 per cent.

"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 per cent 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 per cent 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 USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022. 

(This report has been published as part of the auto generated syndicate wire feed.Apart from the headline,no editing has been done in the copy by ABP Live.)