New Delhi– India’s position as the world’s leading generic drug supplier is seen as the key reason why the U.S. has spared pharmaceuticals from its latest tariff hike, according to industry experts.
President Donald Trump on Wednesday imposed an additional 25 percent duty on Indian goods, raising overall tariffs to 50 percent. However, pharmaceutical exports—accounting for about 35 percent of India’s total pharma shipments to the U.S.—were excluded from the move. The sector remains under review as part of the ongoing Section 232 investigation.
Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance, said the exemption reflects the critical role Indian generics play in ensuring affordable healthcare in the U.S. “India provides the most affordable medicines and is the largest producer globally. The sector supplies nearly 80 percent of the world’s generic medicines,” he noted.
A report by India Ratings and Research (Ind-Ra) underscored the importance of low-cost Indian generics to the U.S. healthcare system, highlighting the sector’s cost advantage. At the same time, it pointed out that the proportion of U.S. revenue in Indian pharma earnings has steadily declined due to price erosion and pressure on margins.
“Most Indian pharma players have a generic business in the U.S. market, earning thin operating profitability. However, Indian companies have a diversified revenue model and a healthy balance sheet. There is no major risk to liquidity in the sector, with large cash balances amounting to 10–11 percent of revenues,” said Vivek Jain, Director, Corporates, India Ratings & Research.
“Furthermore, most companies have sufficient headroom under debt covenants and diversified funding sources. Hence, any material impact from future tariffs on Indian pharma is highly unlikely,” he added. (Source: IANS)
