Indian pharma companies escape Trump’s reciprocal tariffs, for now

Mumbai: India’s pharmaceuticals sector, among the domestic industries most dependant on trade with the US, for now appears to have dodged the heavy reciprocal tariffs US President Donald Trump announced on 2 April.

Pharmaceuticals, among other products, won’t be subject to the reciprocal tariffs, according to a White House fact sheet issued shortly after the US President’s address.

The US is India’s largest export market for pharmaceutical goods, so the exemption brings huge relief to Indian pharma companies, which supply more than 45% of generics and 15% of biosimilars used in the US. Companies such as Aurobindo Pharma, Dr Reddy’s, Zydus Lifesciences, Gland Pharma and Sun Pharma earn anywhere from 30-50% of their total revenues from the US. The industry had been hopeful of an exemption in the lead-up to Wednesday’s announcement.

However, this does not mean tariffs on pharmaceutical imports are off the table. Pharma companies “will come roaring back”, Trump said in his speech on Wednesday, referring to big pharma increasing its manufacturing in the US. “We’re going to produce the… medicines that we need right here in America,” he said. Pharma giants such as Johnson & Johnson and Eli Lilly recently announced investments of $55 billion and $27 billion, respectively, for domestic manufacturing in the US.

Industry-specific tariffs were not part of the White House’s agenda on 2 April, and it’s likely that tariffs on pharma goods will be announced later. According to an 1 April Reuters report, drugmakers are lobbying President Trump to phase in tariffs to give them time to shift manufacturing.

“We have been continuously negotiating with the Trump government and have played our cards well,” a senior industry executive, who did not wish to be quoted, told Mint prior to the announcement.

Of India’s pharma exports of $27.9 billion in FY24, $8.7 billion or 31% were to the US, according to the Pharmaceuticals Export Promotion Council of India, an industry body.

Industry leaders such as Dilip Shanghvi, managing director of Sun Pharma, previously indicated that if tariffs were levied, the costs would likely be passed on to consumers.