Early on Friday, foreign media news reports quoted Trump telling reporters aboard Air Force One: “Pharma (tariffs) is going to be starting to come in, I think, at a level that you haven’t really seen before.”
The end is not in sight for the pharmaceutical industry, with US President Donald Trump talking of unprecedented tariffs on the sector.
The development comes a day after country-specific tariffs had been announced – which had exempted pharmaceuticals. An uneasy calm, however, continued to prevail over the domestic industry, who had sensed the tariff story was not done for them.
Early on Friday, foreign media news reports quoted Trump telling reporters aboard Air Force One: “Pharma (tariffs) is going to be starting to come in, I think, at a level that you haven’t really seen before.”
Faced with uncertainty in the US, companies are looking at different tariff scenarios (10 percent or 26 percent), and measures to deal with it, say Industry-experts, adding that the next two quarters would be “transient”, in an environment of tariffs, counter-tariffs and bilateral negotiations.
There are too many moving parts, and companies will be monitoring them, assessing when they need to act, Hitesh Sharma, Partner and Lifesciences Leader (Tax), with EY India, told businessline. Companies will be looking at costs that can be absorbed and what can be passed on, he said, adding that a closer look would be required on Active Pharmaceutical Ingredients, and intermediates, as well.
Companies with sizeable revenues coming from the US, saw their stock prices take a hit, closing down on Friday – Aurobindo Pharma (-6.06 percent), Cipla (-5.3 percent), Lupin (-5.89 percent), Dr Reddy’s (-3.6 percent), Sun Pharma (- 3.4 percent), Piramal Pharma (-3.3 percent), Zydus Life Sciences ( -3.8 percent), Ipca Labs ( -6.4 percent), Biocon (-5.09), Gland Pharma (-5.5 percent) and Syngene International (-2.8 percent).
“Transient pain”
Industry-insiders are pegging much hope on the bi-lateral negotiations between officials of both countries, and the fact that generic drugs from India helped keep healthcare costs in check for the US. About 40 percent of the generics in the US are from India.
Vishal Manchanda with the Systematix Group. said, “There can be transient pain in the process, while the tariffs are implemented. We might see one or two quarters of pain because there are transient issues whenever tariffs are implemented.”
An industry-insider said, since there was no visibility on pharma tariffs, and since countries are engaging in counter-tariffs,as well – drugmakers are waiting for the dust to settle, as it is impossible to plan ahead in such an environment. Industry representatives point out that companies will not be able to set up manufacturing facilities overnight in the US, and the cost of running operations there will result in higher drug prices that will affect healthcare costs in the US. If tariffs are put on bulk drugs, that would affect even multinationals in the US, the industry representative said.
India has taken measures to reduce or exempt tariffs on many critical US drugs imported into India, the representative said, wondering what the US would now want in reciprocity. Experts apprehend that non-tariff issues like Intellectual Property could be introduced into the negotiations.
According to industry estimates, India’s pharma exports to the US stands at $8.7 billion, imports are about $800 million; import duty on US pharma products to India is close to 11 per cent, while Indian pharma exports to the US have zero import tariff.
Published on April 4, 2025
Buffy Noren
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