New Delhi: While US president Donald Trump has announced 26% reciprocal tariffs on India, the country’s pharmaceutical industry has heaved a sigh of relief as the sector has been exempted from the new levies. According to a fact sheet released by the White House following Trump’s speech on April 2, pharmaceutical companies worldwide will not be facing reciprocal taxes. Currently, the US ranks at the top of the list of the countries to which Indian pharma companies export their products.According to Pharmaceuticals Export Council of India (Pharmexcil), Indian pharma companies exported products worth US $ 8728.60 million in the 2024-25 financial year. This was 15.66% higher than the previous year. Pharmexcil is a body established under Union ministry of commerce and industry. Second is the UK, to which Indian pharma companies supplied products worth US $ 784.32 million in FY24, according to Pharmexil. These figures show that the US is responsible for more than 10 times the monetary volume of pharma trade than the second-placed UK, reflecting how massively Indian pharma companies could have been hit had the sector not been excluded from Trump tariffs – something that many had speculated. Currently, India charges 10.9% tariff on drugs imported from the US while the latter imposes tariffs to the tune of 0.01%, according to the Global Trade Research Instiative. One of the worst hit companies would have been Sun Pharma. Thirty percent of the company’s global revenue comes from its business in US. Cipla, on the other hand, reported an all-time high annual revenue of US $ 906 million in FY24, which was 24% more than the previous year. Similarly, Dr Reddy’s earned 40% of its revenue from the sale of its products in North America in the third quarter of FY 24-25. It is, however, not clear whether this relief is temporary. In his speech on April 2, Trump said, “Pharma companies are going to come roaring back” to the US, adding “because if they [pharma companies] don’t, they got a big tax to pay”.Two major US pharmaceutical companies – Eli Lilly and Johnson & Johnson – have already announced plans to make big ticket investments in the US to boost domestic manufacturing there. It remains to be seen whether more US companies will make such plans and if they do, how these moves will impact major pharmaceutical exporters across the world, including India.The US has significantly benefited from India-made drugs in terms of the volume of the trade. India is one of the biggest suppliers of drugs and active pharmaceuticals ingredients (APIs) to the US. According to IQVIA, Indian pharmaceutical companies supply drugs in substantial proportion to the US residents. Four of out 10 prescriptions are filled by these companies. “In particular, Indian companies supplied 47% of all generic prescriptions filled in the U.S. and 15% of the volume of biosimilars,” IQVIA’s assessment states. ‘Biosimilars’ are drugs which mimic a class of medicines known as ‘biologics’. While a majority of medicines are made in labs, ‘biologics’, on the other hand, are derived from living organisms. ‘Biosimilars’, as the name suggests are nearly identical to biologics but are more affordable. “Overall, medicines from Indian companies provided $219 billion in savings to the US healthcare system in 2022 and a total of $1.3 trillion between 2013 and 2022,” IQVIA’s analysis states. Notably, Indian pharmaceutical companies, in the past two years, have been subject to active scrutiny regarding the quality of products they manufacture. Incidents of children dying due to consumption of Indian drugs in Gambia and Uzbekistan, and the US drug regulator forcing recall of eye drops made by an Indian manufacturer following blindness in some patients in US, have also hurt the reputation of the Indian pharma sector which is often labelled as the ‘world’s pharmacy’.
