By Shalini Bhardwaj
New Delhi [India], July 23 : Experts have hinted that the proposed US decision of tariffs on generic drugs in the pharmaceutical sector is "out of scope" after US President Donald Trump made the announcement on Wednesday (local time).
Speaking to ANI on Trump's tariff announcement on generic drugs, Chairman, Pharmexcil, Namit Joshi said, "The announcement made by Trump is that there will be zero tariff for two years. 100% in the third year and 200% from the fourth year. As per our thinking, it does not seem that it will be possible so soon. Because it takes a minimum of 4-5 years to create any pharmaceutical generic ecosystem. So, if you impose a tariff in two years without creating the ecosystem, then this possibility seems very low...the Indian industry does not have that much scope and margin."
He further explained that it's not going to be easy to absorb and completely out of scope, "Right now we are operating on a very thin margin. We will have a limitation that we will not be able to absorb this tariff. We can only transfer that tariff. Or we can withdraw from the market...if it was 10 years ago, it would have been fine, but right now the operating margin in the US is very low...the entire industry says that 200% is completely out of scope and even 100% is very difficult for them to absorb for any pharmaceutical manufacturer."
Trump, who announced the development in a post on Truth Social, said, the policy is aimed at bringing generic pharmaceutical production back to the United States, with penalties for companies that choose not to establish manufacturing plants and equipment within the specified timeframe.
Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance, said that IPA will continue to engage with US Administration to build a stronger partnership.
"India has been a trusted partner in ensuring the supply of affordable and quality-assured medicines for American patients. Leading Indian pharmaceutical companies have US presence (over 40 facilities), supporting American jobs, investing in manufacturing, research and resilient supply chain. IPA will continue to engage with the US Administration to build a stronger partnership and further strengthen health and medicine security for both countries."
Meanwhile, Nikkhil K Masurkar , Ceo , Entod Pharmaceuticals said India should eye for the healthcare leader for the Global South "If over one-third of our pharmaceutical exports depend on a single country, we're not truly the Pharmacy of the World. India's next ambition should be to become the healthcare leader of the Global South."
"The announcement was largely unexpected, and there is still considerable ambiguity around how these tariffs will actually be implemented. Generic drugs entering the US will continue to attract a 0% tariff until August 1, 2028, after which tariffs are proposed to increase to 100% from August 2028 and 200% from August 2029. Several generic pharma companies already have manufacturing facilities in the US, which could partially mitigate the impact. However, a two-year window appears too short to relocate the entire generic pharmaceutical value chain to the US. Trump's term ends in January 2029, while the major tariff impact begins from August 2028, so the eventual implementation remains uncertain if there is a change in administration. We could see a knee-jerk negative reaction in pharma stocks today, particularly among large-cap generic players, until there is greater clarity on the policy." said Param Desai, Research analyst - PL Capital.