Pharma firms likely to pass on costs in US as fresh levy looms

Indian pharmaceutical companies expect to largely pass on the impact of new US tariffs to customers, minimising pressure on margins.

- SOHINI DAS RAM PRASAD SAHU

But the markets remain spooked by US President Donald Trump's warning that pharma tariffs shall be imposed at "levels you haven't really seen before". The Nifty Pharma index slipped more than 4 per cent on Friday.

Industry insiders are hopeful that India will push for zero import duties on pharmaceuticals in bilateral trade negotiations with the US.

The Indian Pharmaceutical Alliance has already requested that the government consider cutting the current 5-10 per cent import duty to zero; the country imports drugs worth $800 billion while exporting $8.7 billion worth of pharmaceuticals.

Trump has signalled that the tariffs will be announced "in the near future."

"Even if tariffs are imposed on imports from India, our products will remain competitive. We can pass on the tariffs to US buyers no other country matches us on cost and quality for generics," said a senior industry executive involved in government discussions. He added that chances of relocating part of their manufacturing to the US remain "limited". "If a drug costs $1 per dose in India, producing it in the US where labour costs are about 10 times higher would drive prices up four to five times," he said.