`Indian pharma resilient to potential US tariffs'

Potential tariff on pharma imports into the US, while still under Section 232 investigation, is unlikely to impact the credit profiles of Indian pharma companies, India Ratings and Research (Ind-Ra) said.

While the US contributes around 35% to the total revenue for leading domestic pharma companies, this proportion has been steadily declining over the past few years due to price erosion and its impact on margins and returns, a company statement said.


Ind-Ra believes that the low-cost, high-value proposition of Indian generic exports offers significant cost advantages to the US healthcare industry.

Any tariffs imposed would likely be largely passed on to end-consumers, with limited absorption by Indian pharma companies. However, Ind-Ra believes there will be a short-term impact for the initial three to four months due to contracts, pricing, and efforts to maintain market share.

“Most Indian pharma players have a generic business in the US market, earning thin operating profitability. However, Indian companies have a diversified revenue model and a healthy balance sheet. There is no major risk to liquidity in the sector (large cash balances- 10%-11% of revenues). Furthermore, most companies have sufficient headroom under debt covenants and diversified funding sources. Hence, any material impact from future tariffs to Indian pharma is highly unlikely,” says Vivek Jain, Director, Corporates, India Ratings & Research.

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