Indian pharma heaves a sigh of relief, for now; but not medical device makers
NEW DELHI : Indian drugmakers are heaving a sigh of relief, for now, as United States President Donald Trump unveiled his “reciprocal tariff” plans. However, the relief does not extend to medical device makers.
“Pharmaceuticals have been exempted from tariffs. The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security,” the Indian Pharmaceutical Alliance said on Thursday, as the full implications of the tariff plan are still being assessed.
The IPA represents close to two dozen top drugmakers from India, including Sun Pharma, Dr. Reddy’s Laboratories, Zydus, Lupin, and Cipla, which have major exports to the US.
The industry platform has been underscoring the Indian pharma industry’s contribution to the US in terms of cost savings for US patients, thanks to less expensive generic drugs. It has also emphasised the role Indian pharma companies can play in keeping supply chains sustainable. Industry estimates peg Indian pharma exports to the US at $8.7 billion in FY 2023-24.
“India and the US share a strong and growing bilateral trade relationship, with a shared vision to double trade to $500 billion under the Mission 500 initiative. Pharmaceuticals remain a cornerstone of this partnership, as India plays a vital role in global and US healthcare by ensuring a steady supply of affordable medicines,” IPA said, highlighting the need to strengthen “medicine supply chain resilience and reinforcing national security by ensuring access to affordable medicines for all.”
India is home to over 700 manufacturing plants approved by the US Food and Drug Administration (USFDA). Indian generic drugs account for over 40 per cent of all generic prescriptions in the US, translating into healthcare savings for US patients. In the run-up to the tariff announcements, top executives from Cipla, Lupin, and Piramal Pharma had indicated that they would also beef up their existing manufacturing in the US, if required.
Medical devices
However, domestic medical device makers are concerned that the 27 per cent tariff on Indian products could pose challenges for them.
“India has been a key supplier of cost-effective, high-quality medical devices to the US, primarily in low-value high volume consumables categories. However, this new tariff may possibly impact Indian medical devices exports and we have to explore windows of opportunities where USA has been seeking to diversify its supply chain dependence on any one nation,” said Rajiv Nath, with Aimed (Association of Indian Medical Device Industry)
India’s medical device exports to the US stood at $714.38 million in 2023-24, while imports from the US to India were significantly higher at $1,519.94 million, the Association of Indian Medical Device Industry (AiMeD) said, citing data from the Export Promotion Council for Medical Devices.
“While India may seemingly gain a marginal price advantage over China (8 percent) in certain low-risk, high-volume consumables , the real impact may not be significant if our prices were higher than 15 percent and the impact has to be further studied compared to other competing nations,“ observed Himanshu Baid, Managing Director, Poly Medicure.
The primary obstacle “remains non-tariff barriers rather than tariffs themselves. Regulatory hurdles in the US are steep, with FDA approval costs ranging from $9,280 to over $540,000, whereas US exporters face relatively minimal costs when entering India. Addressing these imbalances through bilateral collaboration is crucial,” he added.
Nath further pointed out that the high US tariffs protected US-based manufacturers, giving the medical device industry there “an overnight boost to maximize capacity utilization and expansion for capturing a higher market share in their domestic market.”
Between tariffs, non-tariff barriers, and the Buy American policy for government procurement, the US may become “less attractive for marketing and more attractive as an investment proposition in some products,” he observed.
However, in many low-risk, low-priced, high-volume consumables and disposables—where manufacturing in the US has declined to a negligible level and operations have shifted to Mexico, Puerto Rico, Ireland, and other locations—it may take three to five years or even longer for manufacturing capacity to return to the US, he pointed out.