The U.S. tariff shock, India’s pharma future, Pg10

Key Highlights:

• In September 2025, the U.S. imposed a 100% tariff on branded and patented pharmaceutical imports, effective October 1, 2025.
• India's pharmaceutical exports to the U.S. reached nearly $9 billion in fiscal year 2025, a 14.29% year-on-year increase.
• Global pharmaceutical exports were valued at over $850 billion in 2024, with India shipping $30.47 billion in FY25.
• India's Goods and Services Tax (GST) rationalization, effective September 22, 2025, reduced drug and medicine rates from 12% to 5%.
• India aims to reach a $130 billion pharma market by 2030, with exports surging to $120-$130 billion.
• A total of 16,912 Jan Aushadhi Kendras have been opened under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) as of June 2025.

Detailed Insights:

• The U.S. tariff targets branded drugs, potentially impacting India's $50 billion pharmaceutical sector, which contributes nearly 1.72% to India's GDP.
• While generics dominate India's exports, with 70% going to the U.S. and Europe, the country relies on China for 72% of its active pharmaceutical ingredients (API), exposing supply chain vulnerabilities.
• The U.S. tariff could reduce India's export revenues by 10%-15%, trimming GDP growth by 0.2%-0.3% in FY26, prompting firms to explore "China-plus-one" strategies.
• The GST rationalization is expected to boost consumption by 8%-10%, insulating markets from tariff-driven hikes and saving consumers $1.2 billion annually.
• India has signed six memoranda of understanding (MoU) with Trinidad and Tobago in July 2025, a Singapore API pact, and a Serum Institute dengue treatment collaboration to diversify its export markets.
• Initiatives such as Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), which reduces costs by 70%, demonstrate the effectiveness of domestic buffers in ensuring affordability.

Key Concepts Involved:

• Generics: Medications that are copies of brand-name drugs and are typically sold at lower prices.
• Active Pharmaceutical Ingredient (API): The biologically active component of a drug product that produces the intended effects.
• Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services.
• Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP): A scheme to provide quality medicines at affordable prices to all.