New Delhi, July 22 (IANS). The new tariffs imposed by President Donald Trump on generic drugs will have little impact on Indian pharma companies supplying medicines to the US market, as they are scheduled to be implemented from 2028. This information was given by the analyst on Wednesday.
Many Indian pharma companies have subsidiaries in the US. Also, there is a huge difference in the transfer price of products sent from India to the US and their final selling price in the US market. It is believed that the tariff will be imposed on the price at which the product enters the US market.
Tushar Manudhane, SVP and Institutional Research Analyst (Healthcare), Motilal Oswal Financial Services Limited, said, “About 90 percent of generic prescription drugs used in the US are imported. So whenever this tariff is implemented, it will impact all the countries exporting medicines to the US, it is not limited to India only.”
He said, “The main reason for outsourcing to countries like India is that the cost of manufacturing medicines here is 40 to 60 percent lower than in the US. Even after the imposition of tariffs, India’s competitive advantage of producing at low costs will not be completely lost.”
Manudhane said that even if a new manufacturing plant is set up in America, it will take at least two years to be ready. After this, the process of inspection of the plant and approval of the products will also take at least 12 to 15 months. This will further delay the entry of new competitors into the market.
He said that all these reasons raise questions about the economic feasibility of setting up generic drug manufacturing plants in the US. Therefore, its impact on Indian pharma companies supplying medicines to the US market is likely to be very limited.
India is often called the “Pharmacy of the World” as it supplies generic medicines to many countries of the world.
The share of Indian medicines in terms of quantity in generic medicines used in America is about 40 percent.
According to data from the Global Trade Research Initiative, India exported drugs worth $9.7 billion to the US in FY 2024-25, which was 38 percent of its total global pharma exports of $25.8 billion.
President Trump has announced that imported generic drugs will be exempt from tariffs for two years, starting August 1, 2026. After this, duty will be imposed on them first 100 percent and then up to 200 percent. The aim is to shift pharmaceutical production to the US.
Under this announcement, foreign generic drug manufacturing companies will get two years to set up production units in America. If this is not done, the medicines sent to the American market will face heavy tariffs.
Trump said the phased-in tariff system is intended to encourage pharmaceutical companies to invest in manufacturing facilities in the US.
–IANS
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