Indian drugmakers are hoping that bilateral discussions between the country and the United States will help them steer clear of President Donald Trump's plan to levy at least 25% tariffs on pharmaceutical imports, a trade association said.
India, which calls itself the 'pharmacy of the world', makes cheaper generic versions of complex innovative drugs in its massive factory clusters and exports them to over 200 countries, of which the U.S. is its biggest market, government data shows.
In fiscal 2024, the exports to the U.S. were worth $8.7 billion, or about 31% of total pharma exports, per data from government-backed trade body Pharmexcil. Trump's threat to raise tariffs sent shares of Indian drugmakers sliding on Wednesday.
"This (tariff) matter will be discussed through bilateral engagements between the two countries and further steps will be determined accordingly," Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), said in a statement on Wednesday.
"We are confident that continued dialogue among stakeholders will help address the subject."
According to research firm IQVIA, nearly half of all prescriptions for generic medicines in the U.S. in 2022 were supplied by Indian drugmakers, saving the healthcare system about $408 billion and underscoring the Indian industry's role in access to affordable, quality-assured medicines.
"This (tariff) move is going to be inflationary to the U.S. as they don't have the requisite manufacturing infrastructure in-house to replace the scale of supply that India does," said Vishal Manchanda, an analyst at Systematix Institutional Equities.
The IPA represents some of India's biggest drugmakers, including Sun Pharmaceutical (SUN.NS), Dr Reddy's (REDY.NS), Cipla (CIPL.NS) and Zydus Lifesciences (ZYDU.NS), as well as the local units of U.S. firms like Abbott (ABT.N).
Earlier this week, Sun Pharma Managing Director Dilip Shanghvi told local media that the tariffs, if imposed, will be passed on to consumers.
