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Tariffs

US Tariffs on Pharmaceuticals May Not Affect Indian Exports

Strategic Insights

— 2 min read

The US President's announcement of a 100% tariff on pharmaceutical products may not directly impact Indian pharmaceutical exports, as the measure targets "patented and branded products," while India predominantly ships generic drugs to the US. Indian authorities and industry experts have welcomed this move, citing that most Indian generic exports would not be directly affected in the near term. However, the threat of tariffs looms, and experts warn that this might affect pharma stocks and the sector's growth. Experts also suggest that Indian pharma companies may face challenges if complex generics or biosimilars are included in the future tariff categories.

Key Takeaways:

  • The US President's tariff announcement targets "patented and branded products," which comprise a small proportion of Indian pharmaceutical exports to the US.
  • Most Indian generic exports would not be directly affected by the 100% tariff, although the threat of tariffs will loom.
  • Indian pharmaceutical companies, such as Sun Pharmaceuticals, Dr Reddy's, Lupin, Cipla, and Zydus Lifesciences, saw their stock prices tank after the announcement.
  • The US is the top destination for Indian pharmaceuticals, accounting for $9.8 billion worth of exports in FY2025 out of a total $24.5 billion worldwide.
  • Indian industry experts believe that tariffs may be confined to expensive, patented drugs sold by multinational companies, which may not be viable for generic drug makers due to thin profit margins.
  • The announcement comes as India and the US are negotiating a Bilateral Trade Agreement, with the two sides targeting the conclusion of the first tranche of the deal by this fall.
  • India's goods exports to the US in August were $6.86 billion, while imports were $3.6 billion.

Statistics:

  • $9.8 billion: Value of Indian pharmaceutical exports to the US in FY2025.
  • $24.5 billion: Total Indian pharmaceutical exports worldwide in FY2025.
  • 100%: Tariff rate imposed on pharmaceutical products by the US.
  • 50%: Tariff rate on kitchen cabinets and bathroom vanities.
  • 30%: Tariff rate on upholstered furniture.
  • 25%: Tariff rate on heavy trucks.
  • $1.1 billion: Value of Indian furniture exports to the US in FY2025.
  • $13.15 million: Value of Indian motor vehicles for goods transport exported to the US in FY2025.
  • $4.83 million: Value of Indian wooden furniture used in the kitchen exports to the US in FY2025.
  • $6.86 billion: Value of India's goods exports to the US in August.
  • $3.6 billion: Value of India's goods imports from the US in August.

Sources:

  • "US President Donald Trump's Friday announcement of a 100% tariff on pharmaceutical products may not affect Indian pharma exports as the measure currently targets only 'patented and branded products'," said Ajay Sahai, director general, Federation of Indian Export Organisations.
  • Sudarshan Jain, secretary general at industry association Indian Pharmaceutical Alliance, said, "The social media post by POTUS refers to patented/branded products supplied to the US. It is not applicable to generic medicines."
  • Suresh Subramanian, national life sciences leader at EY Parthenon, said the negative stock market reaction could be due to the sudden announcement and the scope of including complex generics to the levy category remains a risk.

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