The Indian pharmaceutical industry has raised alarms over the potential imposition of US tariffs on pharmaceutical exports, warning that such a move could lead to increased drug costs and potential shortages for American consumers. Industry stalwarts argue that Indian generics provide essential cost savings to the US healthcare system and that tariffs would ultimately be absorbed by consumers.
Dilip Shanghvi, chairman and managing director of Sun Pharma, India’s largest drug manufacturer, noted that tariffs of 10 to 25 per cent could marginally increase costs but are unlikely to justify shifting production to the US. “Profit margins on generic drugs are already slim, and any additional costs will ultimately be passed on to consumers,” he said. Sun Pharma, which derives 32 per cent of its revenue from the US, is closely monitoring developments.
US Pharma Dependence on India
India’s pharmaceutical exports to the US stand at over $9 billion, nearly ten times the value of US pharma imports to India, which is approximately $800 million. According to Umang Vohra, global CEO of Cipla, the third-largest Indian drug maker, tariffs would have limited impact on US-India pharma trade dynamics. “Most life saving drugs imported into India from the US already attract zero tariffs, and any additional tariff waivers would have minimal revenue impact,” he stated.
Vohra further emphasised the crucial role Indian generics play in lowering US healthcare costs, citing a study by IQVIA, a global consulting firm. The report revealed that Indian pharmaceuticals saved the US healthcare system $219 billion in 2022 alone, with total savings of $1.3 trillion between 2013 and 2022. Indian companies also supplied 60 per cent of all hypertension drug prescriptions in the US, leading to $25.3 billion in savings in 2022.
India’s Stance on Tariff Negotiations
The Indian Pharmaceutical Alliance (IPA), the country’s leading industry body, has reportedly suggested that the government push for tariff waivers on the remaining 40 per cent of drugs imported from the US. Industry experts believe such a move could strengthen India’s negotiating position while having minimal revenue implications.
Despite concerns over tariffs, Indian pharma leaders dismissed suggestions of setting up US-based manufacturing facilities as a means to avoid tariffs. “The economics do not justify it, and it is uncertain whether the tariffs would even remain in place long-term,” Vohra stated, referring to the possibility of a policy reversal in future US administrations.
As negotiations unfold, the Indian pharma sector remains focused on ensuring its continued role as a global leader in affordable and accessible medicines, urging policymakers on both sides to prioritise economic and public health interests.
