US tariffs on Pharma: US President Donald Trump announced that tariffs on pharmaceutical product imports will be announced soon. The products have been exempted from the tariffs announced to date. While the move seems to be largely aimed at Ireland and China, Indian pharma companies with significant exposure to the US may still face challenges.

If tariffs are implemented, companies will have to decide whether to absorb the cost or pass it on to consumers. India currently levies up to 10% import duties on drugs imported from the US with several drugs having lower duty of 5% while around 150 drugs are exempted from duties.

The key question is whether India can be exempted from the pharma tariffs, given the better relationship between the countries and the critical nature of India’s generic drug supplies to the US healthcare system.

Country-specific exemption for India unlikely

Analyzing the developments to date, we believe a country-specific exemption for India is unlikely. If pharma tariffs were to be country-specific, there would be no reason to hold them back when they were announced last week. Hence, country-specific exemption is unlikely in the upcoming round of pharma tariffs.