New Delhi [India], August 8 : Imposing tariffs on the pharmaceutical Industry will significantly impact the earnings of Indian pharma companies, as nearly 40 per cent of India's total pharma exports are directed to the US market, according to a report by SBI Research.
The report highlighted that if the US President imposes 50 per cent tariffs on Indian pharma exports as well, the earnings of pharmaceutical companies may decline by 5 to 10 per cent in FY26.
This is because many large Indian pharma companies derive between 40 - 50 per cent of their total revenue from the US market.
SBI stated "a possible tariff of 50 per cent on pharma exports may hit earnings of pharma companies by 5 per cent- 10 per cent in FY26, as many big pharma companies' revenues from US stood in the range of 40-50 per cent".
In FY25, around 40 per cent of India's pharmaceutical exports were directed to the United States. India's share in the US's total pharma imports stood at 6 per cent in 2024.
A possible tariff of 50 per cent on pharma exports will also reduce the competitiveness of Indian products in the world's largest pharmaceutical market and create pressure on profit margins, as companies may be unable to pass on higher costs to consumers.
The report noted that India has been a cornerstone of the global supply chain for affordable, high-quality medicines, particularly life-saving oncology drugs, antibiotics, and treatments for chronic diseases. In the generic drug market, India supplies nearly 35 per cent of the US's pharmaceutical requirements.
If the US were to shift manufacturing and active pharmaceutical ingredient (API) production to other countries or domestic facilities, the transition would take a minimum of three to five years to achieve meaningful capacity, the report added.
Generic drugs account for 90 per cent of prescriptions dispensed in the US but represent only 26 per cent of total drug spending as of 2018.
The report also pointed out that health expenditure per person per year in the US is around USD 15,000, and with India's 35 per cent share in generic drug supplies, any tariff is likely to have a significant impact on US citizens by increasing medicine costs.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor