Indian Pharma Exporters Recalibrate Strategies Amid US Drug Price Cuts

US President Donald Trump's recent announcement to cut the cost of prescription drugs has jolted Indian and APAC manufacturers. While this new development comes a few months after the initial pharma tariff move, Indian pharmaceutical companies aren't left with much choice except to strategise their next steps pragmatically. Here we seek some clarity about what stance the Indian manufactures might take to counter such economic bullying tactics of countries like the United States.

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The Trump administration is at it again and after the pharma tariff saga, the US President has signed a wide-reaching executive order (EO) on May 12. The EO directs drugmakers to lower the prices of medicines to align with what other countries pay. The price cut range may be from 30 to 80 per cent. Drugmakers are required to make the price changes within a month from the date of issuance of the order, failing which, punitive action would be taken. This is all part of the so-called Most Favoured Nation (MFN) pricing framework by the US that has set alarm bells ringing. The US pays the highest prices for prescription drugs, sometimes nearly three times more than other developed nations.

Impact if any?

India's pharmaceutical export to the US is around $9 billion contributing to about 40 per cent of the US generic market. It may be noted that the policy was initially floated during Trump's first presidency but was blocked by numerous legal challenges. Big Pharma's contention is that drug discovery research is very expensive and risky and takes about $2 billion to discover a new molecule, in which the US is the world leader.

Talking about the 30-day deadline announced that seems to be a short notice, Ravi Shah, Partner, Cyril Amarchand Mangaldas, stated, “The 30-day deadline places significant pressure on global pharmaceutical supply chains, but for most Indian generic drugmakers, the immediate operational impact is likely to be limited since the order is primarily aimed at branded medicines. However, the constantly evolving position of the US government underscores the need for Indian companies to remain agile and closely monitor the US regulatory and trade policy changes to be able to suitably adapt its strategy for the US market.”

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