Existing policies on patented and branded drugs remain unchanged after major global drugmakers secured exemptions through pricing and investment deals last year.
But generic medicines present a far greater supply chain challenge because of their lower margins and reliance on global manufacturing networks.
Uncertainty remains over whether the tariffs will ultimately be implemented only on finished medicines or also on drugs manufactured in the US using imported active pharmaceutical ingredients.
China dominates global production of many key pharmaceutical ingredients, including amoxicillin used in antibiotics.
If tariffs are imposed only on finished medicines, companies may still be able to import ingredients into US factories. But if imported ingredients are also targeted, manufacturers – and ultimately, consumers – could face substantially higher costs.
Analysts said the industry was caught off guard by the phased tariff plan, although the two-year transition period provides companies with some breathing room.
Chandrachur Datta, a partner at Vector Consulting Group, said that pharmaceutical firms with existing manufacturing facilities in the US will be better positioned to weather the tariffs.
“Most of the large Indian manufacturers have US facilities, but they have to augment the capacity. The first problem will be to select which (products) should be manufactured and supplied from the US facilities,” he said.
HIGHER COSTS TO FALL ON US CONSUMERS
Industry experts say the additional costs are unlikely to be absorbed by manufacturers and will instead be passed on, at least in part, to American patients through higher medicine prices.
“The tariff is a tax imposed on imported goods, so it would be paid for by the US consumers, with the revenue going to the US government,” said Joseph Carrello, a research fellow at the Melbourne School of Population and Global Health.
Read the full article here
