US Tariffs Could Impact Indian Drug Makers, See How Pharma Sector Will Fare

The smaller companies in the sector are operating on thin margins and the tariffs could add on to the pressure forcing them to consolidate or shut down their business.

Currently, India imposes around 10 per cent import duty on American drugs, while the US doesn’t charge any tariff on Indian drugs.

Source : ABPLIVE AI

The tariffs from the US could severely affect Indian drug manufacturers as the duties would result in higher production costs and make shipments less competitive in comparison to products from other nations.

Experts believe that the pharma sector in India should brace for a huge impact from US President Donald Trump’s fresh tariffs. The smaller companies in the sector are operating on thin margins and the tariffs could add on to the pressure forcing them to consolidate or shut down their business, reported PTI.

Notably, President Trump recently termed India as a ‘very high tariff nation’. He said that the next round of reciprocal tariffs from the US will be effective from April 2, 2025 and will include nations such as India. 

US Market Accounts For A Third Of Indian Pharma Exports

Currently, India imposes around 10 per cent import duty on American drugs, while the US doesn’t charge any tariff on Indian drugs. Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co, noted, “As of recent history, the US has been a net importer of pharmaceutical products to meet its domestic demand. In the event the US decides to impose substantial tariffs on pharmaceutical imports from India, the impact could send noticeable ripples through the Indian pharma sector and simultaneously disrupt its own domestic consumption.”

Indian pharma firms are responsible for supplying a major chunk of drugs to US residents, with four out of ten of all prescriptions filled in the US in 2022 being supplied by Indian firms. In 2022, drugs from Indian firms provided $219 billion in savings to the US healthcare system. Sharma observed that currently the domestic pharmaceutical industry depends majorly on the US market, with American market accounting for roughly a third of its overall exports.

“A sudden tariff increase could significantly raise the cost of medicines manufactured in and exported from India to the US, making them less competitive against products from other countries,” the expert stated.