Trump tariffs to push up US drug prices, won't change India's pharma growth playbook: Pharmexcil
Pharmexcil warns that the US's proposed 25% tariff on Indian imports, starting August 1, threatens to increase the cost of essential medicines in America. This move could strain the US healthcare system, heavily reliant on affordable Indian generics, which constitute 47% of prescriptions.
The Pharmaceuticals Export Promotion Council of India (Pharmexcil) has warned that the US administration's decision to impose a 25% tariff along with additional penalties on all Indian imports starting August 1 will not only make things harder for Indian exporters but will also increase the cost of essential medicines in America, putting pressure on patients and healthcare systems.The US, which sources nearly 47% of its generic drug prescriptions from India, faces a daunting task in finding alternative suppliers that can match the scale, quality, and affordability offered by Indian pharmaceutical companies, Pharmexcil chairman Namit Joshi said at a curtain-raiser of the 11th edition of the International Pharmaceutical Exhibition (iPHEX 2025) in New Delhi on Thursday.'We are in a peculiar situation because no official draft has been issued detailing which sectors or products are exempted. Until there is clarity, we can only assess the impact as a 'what-if' scenario. But if these tariffs do come into effect, they will certainly impact the cost structure of generic medicines exported from India to the US,' Joshi said, adding that Trump's policy announcements often differ from their eventual execution.Notably, US President Donald Trump on Wednesday announced sweeping tariffs on all Indian imports, along with unspecified penalties tied to India's purchase of Russian crude oil and military equipment.
India is one of the largest suppliers of affordable generic drugs to the US, exporting about $10.5 billion worth of medicines annually. These low-cost products help the US healthcare system save billions of dollars. 'India supplies nearly 47% of the generic prescriptions used in the US, amounting to exports worth $10.5 billion. These affordable medicines saved the US healthcare system around $216 billion last year. Any policy move that disrupts this supply chain will inevitably raise costs for patients and strain the healthcare system,' Joshi said.
He further highlighted that supply chain adjustments of this scale cannot happen overnight. 'If Indian supplies are disrupted, the US cannot simply replace them overnight. Establishing new facilities, ensuring regulatory compliance, and scaling up production locally could take three to five years. This is not like shifting a commodity trade; pharmaceuticals require complex regulatory approvals and high infrastructure costs,' he said. Trump has also issued a direct warning to pharmaceutical companies to cut drug prices within 60 days or face action. In letters posted on his Truth Social platform, he said his administration would 'deploy every tool in our arsenal to protect American families from abusive drug pricing practices,' though no specific penalties were detailed. White House press secretary Karoline Leavitt said, 'President Trump believes the American people deserve affordable access to life-saving drugs. These letters make clear: cut the prices or face the consequences.'However, India's response to potential tariff barriers will not be short-term, Joshi stressed. 'Our pharmaceutical strategy is not reactive to tariff measures. For years, we have been pursuing mergers, acquisitions, and even setting up greenfield manufacturing units overseas to align with onshoring trends. Post-Covid, this strategy has only gained more momentum, as countries focus on strengthening local supply chains,' he noted.He also underscored the cost burden already carried by Indian exporters. 'Maintaining USFDA-compliant facilities comes at a significant cost—around 12% of revenue for each plant. India has 754 such plants, representing a huge investment to ensure uninterrupted, high-quality supplies to the US market. Any tariff burden will further challenge the low-margin generic drug model that benefits US patients,' he said.Pharmexcil said it will continue to engage with policymakers in the US and India to stress the critical role Indian drug manufacturers play in ensuring affordable access to essential medicines worldwide.Indian pharma players have reacted sharply to the development, saying the move will hurt both nations in the long run. Nikkhil K. Masurkar, CEO of Entod Pharmaceuticals, said, 'I firmly disagree with the imposition of the 25% tariff on Indian exports by the Trump administration. This approach is not just economically regressive but borders on economic intimidation. Rather than building strategic alliances, this tactic creates unnecessary barriers, especially for emerging economies like India.''India must respond with strategic maturity, not reactive retaliation. This includes intensifying trade relations with more reliable and equitable partners, accelerating FTAs with the EU, ASEAN, and Africa, and doubling down on our 'Make in India' and 'Export from India' missions. At the same time, we need to invest in global competitiveness, strengthening R&D, lowering input costs, and supporting MSMEs to reduce overdependence on any one market,' he added.
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