Indian pharmaceutical companies in trouble? Trump says will hike Tariff on pharma imports

After his announcement of reciprocal tariff on April 2, the US President Donald Trump has given another fear to economies worldwide. On Tuesday (April 8) Trump announced that Washington will soon introduce a "major" tariff on pharmaceutical imports. The move could end decades of low-cost global trade in medicines and severely impact countries like India that are highly dependent on trade with the America.

Since 1995 World Trade Organisation (WTO) agreement aimed at keeping medicines affordable, most of the countries, including the US have imposed few or no tariffs on finished drugs, reported the BBC.

The move according to Trump, who was speaking at an event at the National Republican Congressional Committee, will encourage drug companies to shift their operations to the United States.

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“We are going to be announcing very shortly a major tariff on pharmaceuticals,” Trump said Tuesday adding, “Once we do that, they’re going to come rushing back into our country, because we’re the big market,”

What impact will it have on India?

This move on Pharma imports could dent India's pharmaceutical market to a large extent as it is one of the largest suppliers of medicines to the U.S.

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According to the Pharmaceuticals Export Promotion Council of India, an industry body, India's pharma exports to the US was valued at $12.72 billion, making it India's largest export market.

Over 45 per cent of generic and 15 per cent of biosimilar drugs are imported to the US from India and companies like the Dr Reddy's, Zydus Lifesciences, Sun Pharma, Aurobindo Pharma, and Gland Pharma earn anywhere between 30-50 per cent of their total revenues from the American market, according to reports.

Notably, medicines from Indian firms saved the U.S. healthcare system USD 219 billion in 2022 alone, and USD 1.3 trillion between 2013 and 2022, reported the Economic Times.

According to analysts the move will have an impact on both, India and US, as it will raise production costs, erode price competitiveness and cost more to customers.