New Delhi: Indian pharmaceutical companies are banking on bilateral negotiations with the United States to sidestep President Donald Trump's proposed 25% tariff on pharmaceutical imports, according to a leading trade association.
India, often referred to as the "pharmacy of the world," is a major producer of affordable generic drugs, supplying over 200 countries, with the U.S. being its largest market, government data reveals.
"This matter will be addressed through bilateral discussions between the two nations, and further steps will be decided accordingly," Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), stated on Wednesday. "We are optimistic that continuous dialogue among key stakeholders will help resolve the issue."
The IPA represents major Indian pharmaceutical companies such as Sun Pharmaceutical, Dr. Reddy's, Cipla, and Zydus Lifesciences, as well as the Indian divisions of U.S.-based firms like Abbott.
Earlier this week, Sun Pharma’s Managing Director, Dilip Shanghvi, indicated that if the tariffs are enforced, the additional costs would ultimately be transferred to consumers.
In fiscal 2024, Indian pharmaceutical exports to the U.S. amounted to $8.7 billion, comprising nearly 31% of total pharma exports, as per data from government-backed trade body Pharmexcil. The threat of tariffs led to a dip in Indian pharmaceutical stocks on Wednesday.
"The Indian government will certainly engage in discussions on the evolving situation and strive for the best possible resolution," said Raja Bhanu, Director General of Pharmexcil, in an interview with Reuters. "Our unique selling point is quality and affordability," he added, emphasizing India's competitive edge in pharmaceutical exports.
According to research firm IQVIA, Indian manufacturers supplied nearly half of all generic drug prescriptions in the U.S. in 2022, saving the American healthcare system approximately $408 billion.
During a recent interview with Fox News, Trump stated he had informed Indian Prime Minister Narendra Modi that the U.S. would implement a "reciprocal" tariff policy, mirroring India's tax rates. He later indicated that the new tariffs could be announced "next month or sooner."
Currently, India imposes a 10% import duty on pharmaceuticals from the U.S., whereas Indian pharma exports face little to no import tariff in the U.S., industry experts note.
"This move will be inflationary for the U.S., as its domestic manufacturing infrastructure is not equipped to replace the scale of pharmaceutical supply that India provides," warned Vishal Manchanda, an analyst at Systematix Institutional Equities.