NEW DELHI: The domestic pharma industry may not be significantly impacted by potential US retaliatory tariffs as most exports to the US include low-cost, price-inelastic generics that remain in constant demand.
Indian pharma exports to the US, valued nearly $10 billion, mainly include oral formulations, and any additional cost burden would likely be shared between consumers, healthcare providers, and domestic companies, analysts told TOI.
India is a major supplier to the US, providing over 45% of its generic medicines, driven by an ageing population and demand for cost-effective healthcare. Given this, no country would likely disrupt such a critical supply chain.
Pharma stocks were under pressure on Feb 19, following comments from US President Donald Trump, who signalled that the US may impose tariffs of around 25% on pharmaceutical, automobiles and semiconductor imports. The industry is in a wait-and-watch mode, awaiting clarity on the details of potential tariffs, and is hopeful that a resolution may be reached through bilateral talks.
"Indian pharmaceutical industry plays a vital role in ensuring access to affordable, quality-assured medicines in the US, supplying nearly 47% of the generic medicines for American patients and contributing significantly to the country's healthcare savings. The proposal regarding reciprocal tariffs is currently under talks and is being examined. This matter will be discussed through bilateral engagements," Sudarshan Jain, secretary general, Indian Pharma Alliance said.
An imposition of a potential tariff would make a small difference in absolute terms for certain players, analysts feel. In some cases, widely-sold paracetamol, azithromycin, cephalosporins cost as low as 2 cents a tablet.
"The effect will be more on innovators than generics as generics are very low in value. Some of these will be passed on and some will be absorbed by the seller. We will have to wait and see the financial impact,'' Sujay Shetty, global health industries advisory leader, PwC India said.
"We don't see much of a significant impact on Indian pharma (as of now). India is a strategic partner, which meets about 45-50% of the US requirements of generic medicines," Deepak Jotwani of Icra said.
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