US tariffs on pharma imports can severely hit Indian firms: Experts
India currently levies around 10 per cent import duty on American drugs, while the US doesn't charge any import duty on Indian drugs. Enhanced tariffs levied on pharmaceutical imports will severely impact Indian pharmaceutical companies as it would lead to higher production costs, making shipments less competitive against products from other countries.
Terming India as a very high tariff nation, US President Donald Trump has said that reciprocal tariffs on countries that impose levies on American goods will kick in on April 2.
Notably, four of ten medical prescriptions in the US in 2022 were supplied by Indian companies. Additionally, Indian firms are also heavily reliant on US importing medicines, with the country accounting for roughly a third of the Indian pharmaceutical industry's total exports.
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Shardul Amarchand Mangaldas & Co Partner Arvind Sharma told PTI that as of recent history, the US has been a net importer of pharmaceutical products to meet its domestic demand. "In the event the US decides to impose substantial tariffs on pharmaceutical imports from India, the impact could send noticeable ripples through the Indian pharma sector and simultaneously disrupt its domestic consumption," he noted.
As per industry sources, overall, medicines from Indian companies provided $219 billion in savings to the US healthcare system in 2022 and a total of $1.3 trillion between 2013 and 2022. Generics from Indian companies are expected to generate an additional $1.3 trillion in savings over the next five years.
"A sudden tariff increase could significantly raise the cost of medicines manufactured in and exported from India to the US, making them less competitive against products from other countries," he added.
By imposing tariffs, the US might inadvertently increase its domestic healthcare costs, burdening consumers and, in turn, making healthcare access scarcer, Sharma stated. Additionally, in the situation where substantial tariffs are imposed by the US on Indian pharmaceutical products, then that might encourage Indian pharma companies to diversify their export markets, possibly shifting focus to Europe, Latin America or Africa, he said.
