Editorial: Wake-up call for India’s pharma exporters

Trump's 100 per cent tariff on branded drugs challenges India's pharma exporters but opens doors for growth in generics and biosimilars

By now, the world has become accustomed to the whimsical ways of United States President Donald Trump. The maverick Republican has come up with another policy shock: imposition of a 100 per cent tariff on branded or patented pharmaceutical products. India, a major pharma exporter, will have to bear the brunt of the consequences. Until now, pharma exports were exempt from the 50 per cent tariffs imposed by the Trump administration on Indian goods. This would change now. The latest tariff move is a wake-up call for global pharma exporters as it signals a shift toward protectionism that could reshape future access. Expectedly, the Nifty Pharma index, designed to reflect the behaviour and performance of the pharmaceutical sector in India, fell by more than 2 per cent as the news trickled in. The move comes in the midst of renewed negotiations between India and the United States to finalise a trade deal. Being the global pharmaceutical hub, Telangana is wary of the new development. Some experts have suggested that since the Trump administration is currently targeting only branded and patented drugs, the pharma industry can treat this as an opportunity to step up trade negotiations with other countries, diversify export markets, and invest more heavily in complex generics and biosimilars. Since local companies primarily focus on manufacturing low-cost generic drugs, they remain largely unaffected by these tariffs. While the current exemption for generics protects their existing business operations, there are fears, in some quarters, that the US may redefine or expand the scope in the future to include complex generics or other pharmaceutical categories.

In response to this uncertainty, several companies are actively exploring US-based manufacturing partnerships to ensure business continuity and regulatory compliance. Telangana, particularly Hyderabad, has established itself as a global pharmaceutical hub, exporting vaccines and pharmaceutical products to over 150 countries through 214 USFDA-approved manufacturing facilities. The State contributes approximately one-third to India’s total pharmaceutical production and accounts for one-fifth of the country’s pharmaceutical exports. Hyderabad serves as the epicentre of this pharmaceutical ecosystem, housing over 800 industrial pharmaceutical units. The city is home to renowned firms, including Dr Reddy’s Laboratories, Aurobindo Pharma, Hetero Drugs, Laurus Labs, and MSN Pharmaceuticals. As a whole, India is seen as the ‘pharmacy of the world’ and exports over $10 billion worth of pharma products to the US out of $30 billion worldwide. It mainly supplies low-cost generic drugs to America, which are not covered under the new tariff regime. However, there is no clarity yet 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.

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