Pharma industry body seeks govt to consider tariff cut on US pharma imports to zero

Pharma industry body seeks govt to consider tariff cut on US pharma imports to zero

Indian Pharmaceutical Alliance (IPA), which represents large Indian drugmakers, has conveyed to the government to possibly consider zero tariffs on US drug imports, as a response to Trump administration contemplating a flat 25% import tariff or reciprocal tariffs on  Indian pharmaceutical imports.

The industry body that represents large homegrown pharmaceutical companies that have significant exposure to US market feels that reducing the tariffs on US imports wouldn't cost a lot to India, and may even convince Trump administration to offer relief on tariffs.

"We supply (export to US) $9 billion (worth of pharmaceutical products), They  supply $800 million dollars, 60% (US exports) we have made it (tariff) zero. Make others also zero, is what we are saying," said Sudarshan Jain, secretary general, IPA told Moneycontrol.

"The government is also working, we are giving our view point," Jain said.

Jain added that tariffs will increase the cost of medicines to US patients and may lead to shortages as manufacturers have to either pass on the tariff cost or exit products that are unviable.

"Common sense says that if you put 25% (tariff) on a low value product, it will be non-viable," Jain said.

Sudarshan says that the cost of manufacturing in India is one fourth of the US, and also said it take about 3-4 years to set up a new manufacturing plant.

"Ours exports are very small compared to Europe which exports drugs worth over $200 billion to US, it is largely about volume," Jain said.

Dilip Shanghvi, managing director of Sun Pharma and G.V. Prasad, co-chairman and managing director of Dr.Reddy's - the members of the IPA have echoed the same views, about medicines becoming expensive for US patients.

"I think it'll make it costlier for the US consumers or the US intermediaries," Prasad told media at a recent event in Hyderabad.

Prasad added that shifting all these products (manufacturing) from worldwide into US is not practical.

US charges zero tariffs on Indian pharmaceutical imports, India charges around 10-11% on imports of  US pharma products which are largely high value and patented products for treating diseases likes cancers, autoimmune and rare diseases, among others.

The government, in the latest budget, has announced full exemption of 36 lifesaving drugs for treating cancer, rare diseases and chronic diseases from basic customs duty, to make it affordable for Indian patients. Many of those products are imported and sold in India by US pharma companies.