A fresh threat by US president Donald Trump on Monday that sector-specific tariffs on pharmaceuticals could be announced in the next two weeks has hammered the stocks of Indian drug-makers on Tuesday, but industry executives saw little chance of a quick or drastic move by Washington.
Industry draws comfort from the fact that the US Department of Commerce (DOC) might take several months to complete its report on import of medicines and submit a final report to the President. The probe, being conducted under Section 232 of the Trade Expansion Act, covers national security implications.
“The public consultation process on this investigation ends on May 7, and the DOC will then study the views. They have 270 days to complete the report and present it to the President. We don’t see any tariffs before that,” head of a leading pharma association told FE, on condition of anonymity.
On April 4, Trump said that he will impose “never-seen-before” tariffs. This threat had come just two days after he had announced 26% tariffs on Indian exports to the US, barring pharma semiconductors and a few other sectors, as part of near-universal reciprocal tariffs. These imposts are kept in abeyance till June 7, except for China.
Another pharma industry executive, however, said that extra tariffs on medicines might come during 90-day pause period for reciprocal levies.
Trump on Monday signed an executive order on Monday that aims to reduce the time it takes to approve pharmaceutical plants in the US, as part of a slew of initiatives to encourage domestic manufacturing. The order asks the US Food and Drug Administration to streamline reviews and work with domestic manufacturers to provide early support before facilities come online.
“We welcome the Trump administration’s order to speed up regulatory approvals for setting up pharma factories in the US. The Indian pharma companies can potentially benefit from this order,” the second executive told FE.
On Tuesday, the Nifty pharma index fell 1.11% with several large pharma companies registering a sharp drop.
Industry experts believe that the tariffs on pharma imports could severely hurt US healthcare system which is already facing shortage of generics drugs since 2023. India is a major exporter of affordable generics drugs to the US with nearly 47% share in market in overall generics market.
India has been bringing down the tariffs on life-saving drugs to reduce the cost of expensive therapies for patients. In the last Union budget, the government proposed basic customs duty exemption on 36 life-saving drugs and medicines and concessional customs duty of 5% for six more medicines.
In April-December 2024-25, India exported pharma products worth $6.6 billion to the US, while it imported such items worth $308.4 million from the country. India’s drugs exports to the US stood at 8.1 billion in 2023-24. The US is keen to increase pharma exports to India, but the country’s patenting regulations and price controls are hampering the efforts.