Tariffs Can Make Pharma Go Slow on Off-Patented Drugs
The Indian pharma industry exports drugs valued around $9 billion to the US.
Chennai: India may lose the chance to grab the Rs 12,000 crore opportunity of US drugs going off-patent in the coming years if US President Donald Trump imposes tariffs on pharma imports. Automobile component manufacturers too may find it tough to export products to the US.
Donald Trump in his speech mentioned that he plans to impose tariffs on automobiles, pharmaceuticals and computer chips after steel and aluminum.
The Indian pharma industry exports drugs valued around $9 billion to the US. “India is a major supplier of generic drugs and getting an immediate alternative at that cost will be tough for the US. If the US wants to build its own generic production by funding the industry, it will increase the cost of pharma products in the US and insurance companies will have to bear the burden of the higher costs,” said Ravi Uday Bhaskar, former director general of the Pharmaceuticals Export Promotion Council of India (Pharmexcil).
However, P V Appaji, former director general of Pharmexcil finds that the interest of Indian companies to get approvals for generics of the drugs going off-patent will slacken. The US will see expiry of drugs worth Rs 12000 crore between 2025 and 2028 and this was seen as a huge opportunity for Indian generic drug manufacturers.
“The cost of getting new product registration and ANDA is going up significantly. Further, initially, the price difference between the generic and off-patented drug will be around 10 to 15 per cent and it takes one to two years for the prices to come down by 70 to 80 per cent. The higher tariffs can make the pharma companies go slow on filing ANDAs for off-patented drugs. This could moderate the growth of the sector,” he said.
If India levies retaliatory tariffs on critical drugs and innovative drugs imported from the US, the prices in India will go up, burdening the public.
India exports $22 million worth automobiles and $1.7 billion valued auto components. In the case of auto components, the US relies on Mexico and the global value chain. Having its own production in the labour-intensive sector can be counterproductive. Considering the hourly wages system in the US, the cost of production will go up and make automobiles costlier.