NEW DELHI: Domestic generic producers are likely to see near-term gains as higher prices for branded drugs can push demand towards cost-effective alternatives after the US announced its decision to impose 100 per cent tariffs on the pharmaceuticals industry from October 1, analysts said on Friday.
Generic drugs are currently exempted from US tariffs and according to Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance (IPA), the latest tariff announcement is for "branded or patented drugs, and not applicable to generics".
Domestic pharmaceutical firms supply a substantial proportion of drugs to US residents.
As per industry sources, overall, medicines from Indian companies provided $219 billion in savings to the US healthcare system in 2022 and a total of $1.3 trillion between 2013 and 2022.
According to Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat, the US decision to impose 100 per cent tariffs on branded and patent-protected medicines is a significant shift in trade policy, given that pharmaceuticals were earlier exempt from reciprocal tariffs and Section 232 duties.
“For Indian pharma, which supplies nearly $20 billion worth of generics to the US, that is about 40 per cent of its consumption, the impact is two-fold. Companies manufacturing branded products abroad for the US may face headwinds, while domestic generic producers could see near-term gains as higher prices for branded drugs push demand toward cost-effective alternatives, ” he mentioned.