Indian Pharma Resilient as US Weighs 25% Tariffs on Imports

On February 19, pharmaceutical stocks faced pressure after remarks from US President Donald Trump, indicating that the US could implement tariffs close to 25% on imports of pharmaceuticals, automobiles, and semiconductors.

The domestic pharmaceutical sector might not face considerable effects from possible US retaliatory tariffs since the majority of exports to the US consist of inexpensive, price-inelastic generics that maintain constant demand.

India is a key provider for the US, supplying more than 45% of its generic drugs, driven by an aging demographic and the need for affordable healthcare. Indian pharmaceutical exports to the US, amounting to nearly $10 billion, primarily consist of oral formulations, and any extra cost burden is expected to be distributed among consumers, healthcare providers, and local companies.

"Indian pharmaceutical industry plays a vital role in ensuring access to affordable, quality-assured medicines in the US, supplying nearly 47% of the generic medicines for American patients and contributing significantly to the country's healthcare savings. The proposal regarding reciprocal tariffs is currently under talks and is being examined. This matter will be discussed through bilateral engagements," Sudarshan Jain, secretary general, Indian Pharma Alliance said.

Analysts believe that the introduction of a possible tariff would have a minor impact in absolute terms for specific players. In certain instances, commonly available paracetamol, azithromycin, and cephalosporins can be priced as little as 2 cents per tablet.