Indian Pharma Companies Poised to Benefit from US Tariff Changes

Indian pharmaceutical companies are expected to gain market share due to the potential impact of higher US tariffs, as noted in a JPMorgan report. The cost competitiveness of Indian firms positions them well to benefit compared to global competitors, with manufacturing relocation to the US unlikely due to the high costs associated with tariffs.

If the US imposes a 10% tariff, it is expected that a significant portion will be passed on to consumers, raising drug costs and insurance premiums. Biosimilars, which have limited US manufacturing infrastructure, are likely to be exempt from tariffs to avoid significant patient cost increases.

The report also suggests that while Indian pharma companies may consolidate in response to tariffs, they are unlikely to exit the market.

Tariffs on Active Pharmaceutical Ingredients (APIs) are not anticipated, but if imposed on Contract Development and Manufacturing Organisations (CDMOs), the costs would likely be passed to customers. Finally, while the US seeks to reduce import reliance, the high costs of manufacturing in the US make relocating production impractical.