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U.S. accounts for nearly a third of India's pharmaceutical

exports

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India's trade body confident of country retaining market

share

in U.S, despite tariffs

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Tariffs could lead to drug price increase in U.S., say

analysts

By Rishika Sadam

HYDERABAD, India, Feb 21 (Reuters) - Indian

pharmaceutical companies will be able to retain their dominant

market share in the U.S. in selling generic drugs even if

President Donald Trump imposes high tariffs because they are

"highly competitive", a government-backed trade body said.

The U.S. accounts for nearly a third of India's

pharmaceutical exports, mainly cheaper versions of popular

drugs, with sales jumping 16% to about $9 billion last fiscal

year.

Trump has said he could impose tariffs of 25% or more on

pharmaceutical imports and an announcement could be made by next

month. India's drug industry has said it hopes bilateral talks

will earn them an exception, though Trump has ruled out any such

concession so far.

The Pharmaceuticals Export Promotion Council of India

(Pharmexcil), set up by the trade ministry, said it believed

that the Trump warning was mostly directed at costly imports of

patented and other such products from other countries.

"India pharma will not selectively be imposed high duties

and its exports are highly competitive, so it can still compete

in the newer environment (with import duties if at all imposed)

without losing its share," Pharmexcil Director General Raja

Bhanu told Reuters.

"The government will certainly have discussions about the

changing situations and try to bring the best possible

solution."

India imposes about 10% tax on pharma imports from the U.S.

while paying nearly no tariff for its exports to the country,

according to industry experts.

India sells about 65% of all generic drugs in the U.S,

according to Citi Research. According to the Indian government,

generic drugs are 50% to 90% cheaper than branded ones.

Higher tariffs will further pressure thin margins of up to

15% of core earnings for most Indian generic drugs unless costs

are passed onto consumers, analysts said.

"Tariffs (if not passed through) may result in a large part

of the Indian generic drug supply to the U.S. turning unviable,"

Citi Research said in a note.

"Companies may be forced to rationalize portfolios or (make)

exits that may result in massive shortages in the U.S. and

resultant drug price increases. If Indian players start exiting

from the generics, drug shortages in the U.S. may escalate

beyond control."

According to research firm IQVIA, overall cheaper generic

drugs saved the U.S. healthcare system about $408 billion in

2022.

Sun Pharma, India's largest drugmaker that made

32%of its total revenue through U.S. sales last fiscal year, has

already said it will pass on any costs to consumers.

Other big Indian players include Dr Reddy's, Cipla

and Zydus Lifesciences.

The tariff uncertainty could dominate discussions at the

BioAsia conference in India's Telangana state next week,

expected to be attended by executives from pharma giants

including Eli Lilly ( LLY ), Novo Nordisk.