Indian Pharma Thrives Amid Proposed US Tariffs: Report

Despite proposed US tariffs of 10-25%, Indian pharma CDMOs remain resilient, continuing to thrive due to favorable global factors. The B&K Securities report highlights that exports from India, crucial to the US generic drug supply, will face marginal impact, allowing local players to maintain strong international ties and expand capabilities.

Indian pharmaceutical companies, particularly Contract Development and Manufacturing Organizations (CDMOs), are not expected to experience significant disruptions due to proposed US tariffs ranging from 10% to 25%, as per a report by B&K Securities. The report underscores that Indian pharma firms will continue to leverage favorable global conditions, despite looming trade restrictions.

The US market remains crucial for Indian CDMOs, with annual exports valued at approximately USD 9-10 billion. While concerns over the proposed tariffs exist, the report indicates that Indian companies anticipate only a marginal impact on their US business operations.

India plays a pivotal role in supplying the US generic drug market, providing essential Key Starting Materials (KSMs), Active Pharmaceutical Ingredients (APIs), and finished formulations. Indian exporters, who contribute nearly 40-45% of the generic drug volume in the US, can largely transfer any cost increases from tariffs onto end consumers, thus alleviating financial stress on domestic manufacturers.

Moreover, the report highlights global pharmaceutical companies' increasing trend towards outsourcing production to Indian CDMOs, driven by the China+1 diversification strategy. The beneficial USD/INR exchange rate and a rise in requests for quotations (RFQs) further expand growth prospects for Indian companies.

Indian CDMOs are aggressively investing in enhancing their capabilities, exploring advancements in complex chemistry, and expanding into specialized fields such as Antibody-Drug Conjugates (ADCs), peptides (including GLP-1), Cell and Gene Therapy (CGT), CAR-T, and Biotechnology.

With the global CDMO market estimated at USD 180 billion, Indian pharma firms are poised to seize emerging opportunities. Their continued investment in research, technological progress, and increased production capacity will likely fortify India's position in the global pharmaceutical landscape, despite the uncertainties surrounding trade policies.

(With inputs from agencies.)