Indian pharma sees little immediate threat in Trump's 200% tariff plan, Pg9

Key Highlights:

• Former US President Donald Trump announced a plan to raise tariffs on economical generic pharmaceuticals from India to 200% over three years.
• The current zero percent tariff would continue for one year, with the 200% tariff implemented thereafter.
• The move aims to reshoring generic pharmaceutical production back into the United States.
• India currently accounts for 47% of all generic medicines prescribed in the US, with exports valued at USD 10.5 billion in FY2025.

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Detailed Insights:

• The Indian generic pharmaceutical industry has historically remained largely unaffected by previous US tariff announcements.
• Former Pharmexcil DG Udaya Bhaskar noted that previous attempts by the US to support domestic manufacturing of generics and Active Pharmaceutical Ingredients (APIs) did not gain significant traction due to higher costs and lower production volumes compared to India.
• US companies would likely face at least 30% higher costs to produce generics domestically compared to Indian manufacturers.
• The US is substantially dependent on Indian generics, and increased tariffs are expected to raise costs for American patients, insurers, and healthcare providers.
• Data indicates a 79% decline in India's pharmaceutical exports to the NAFTA region in 2025-26, suggesting a shift away from the US market.
• The Global Trade Research Initiative suggests that large-scale reshoring of generic drug production will be challenging due to reliance on low-cost global supply chains and imported APIs.

Key Concepts Involved:

• Generic Pharmaceuticals: Bioequivalent copies of branded drugs, typically offered at significantly lower prices after patent expiration.
• Reshoring: The process of returning the manufacturing of goods to the company's country of origin.
• Tariff: A tax or duty to be paid on a particular class of imports or exports.
• Active Pharmaceutical Ingredients (APIs): The biologically active component of a drug product that produces its intended therapeutic effect.