The new Donald Trump administration can be expected to take an "interventionist" approach to the pharmaceutical sector and there will be a potential fallout for Indian drug suppliers, according to Sujay Shetty, Pharma Head at consultancy giant PwC India.
Speaking to CNBC-TV18, Shetty said that while it’s too early to say that the Trump regime’s “America First” policy will be detrimental to the interests of Indian pharma companies, the new US president is likely to take up cudgels on behalf of US companies, who have raised issues related to IT, law, and patents vis-a-vis Indian companies.
Shetty said talk of a border tax on imports could lead to a higher cost for Indian pharma companies in terms of exports. He added that even though Trump signed an order to repeal and replace Obamacare, Indian generic suppliers would not be much affected as they were only indirect beneficiaries of the affordable healthcare scheme.
Major Indian pharma companies earn around 15-50 percent revenue from the US market. Shares of pharma companies were under pressure following US President-Elect Donald Trump's comments on drug pricing and foreign manufacturing. Trump also said that the US will create new drug-bidding procedure.
Trump's campaign platform included allowing the Medicare healthcare program to negotiate with pharmaceutical companies, which the law currently prohibits. Surajit Pal Pharma, pharma analyst with stock broking firm Prabhudas Lilladher, said this could have a negative impact on pricing.He said the sector is overheated and that the outlook for largecap companies will remain negative till 2019.
Below is the verbatim transcript of Surajit Pal and Sujay Shetty’s interview to Prashant Nair and Ekta Batra on CNBC-TV18.Ekta: There is this repealment and replacement of Obamacare that we can expect but besides that, what is your sense in terms of what could be the most detrimental for Indian generic pharmaceutical companies that Trump could announce in the next couple of days?Shetty: I think it is early to say detrimental, but it appears from President Trump’s public pronouncements that is i.e. to put America first and also it appears he will follow a more bilateral approach in trade relations. Perhaps two areas you could think of in its impact on Indian pharmaceutical. The first would be clearly he is going to take up the cudgels on behalf of US pharmaceutical. In the past, some folks in US pharmaceutical have complained about India’s IP laws, patents, access through market, etc. so you could expect him taking a more interventionists, bilateral approach asking India to keep its market as open as the US does for Indian companies. That clearly is one area. The second area could be, we have been hearing some talks about border taxes for imports. In pharmaceutical it is less clear how this will operate because you can’t switch production because of regulatory approvals. However, if there should be so then there could be some impact in terms of higher costs for Indian pharmaceutical in terms of its exports to US markets.
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