Pharma tariffs: Trump keeps Indian drug-makers on tenterhooks

AMID renewed talks between India and the US to finalise a much-delayed trade agreement, President Donald Trump has announced 100 per cent tariffs on branded and patented pharmaceutical products — unless manufacturing firms set up production facilities in America. This move has implications for India, which has established itself as the ‘pharmacy of the world’ and exports over $10 billion worth of pharma products to the US out of $30 billion worldwide. India mainly supplies low-cost generic drugs to the US; fortunately, these are not covered under the new tariff regime. However, there is no clarity so far on active pharmaceutical ingredients (APIs). Moreover, major Indian drug-makers are increasingly focusing on complex generics, which largely fall under the branded or patented category. Generic versions of these products, which include inhalers, injectables and ophthalmic solutions, are difficult to develop due to their complex formulations. These items are commercially important for manufacturers as they help them access higher-value markets and reduce dependence on traditional generics.

No wonder the Indian pharma industry is keeping its fingers crossed. The sudden drop in some of the country’s biggest pharma stocks might be just a short-term panic reaction, but there is no doubt that uncertainty prevails over Trump’s next move. What if he unleashes a tariff onslaught on generics as well? The argument against such a drastic step is that healthcare costs will go up and patients’ access to medicines for critical diseases will become restricted. India must drive home this point during the ongoing trade talks.

The prohibitive tariffs might prove to be counter-productive, adversely impacting the American healthcare system that is already at the receiving end of Trump’s disruptive decisions. India, a major supplier of affordable medicines to the US, must ensure that the upcoming pact has adequate safeguards for its pharma sector.