The Indian government is set to raise the issue of the United States' decision to impose a 100% duty on patented drug imports from India during upcoming trade negotiations. New Delhi aims to secure tariff concessions comparable to those granted to the United Kingdom and European Union countries, following representations from the domestic pharmaceutical industry.
Background of the Tariff Decision
The tariffs, announced in April under the Section 232 probe, place Indian companies exporting innovator drugs at a significant disadvantage. In contrast, the UK and EU countries benefit from concessional tariff rates of 15-20%, according to sources familiar with the matter. The phased implementation of these duties is expected to begin in July this year.
Impact on Indian Drug Exports
Industry experts warn that these duties threaten the viability of India’s drug exports and could deter future investments in the Contract Research, Development, and Manufacturing Organisation (CRDMO) sector. Domestic CRDMO companies, including Syngene International, Aragen Life Sciences, and Aurobindo Pharma’s TheraNym, have built strong partnerships with global innovator firms such as Bristol Myers Squibb and MSD, investing heavily in biologics discovery, development, and manufacturing capabilities.
The proposed tariffs could undermine the sector’s competitiveness and weaken India's position as a preferred destination for contract manufacturing of biologics, experts caution.
India's CRDMO Potential
According to a report by Boston Consulting Group (BCG) and the Innovative Pharmaceutical Services Organization last year, India currently holds a 2-3% share of the global CRDMO market, valued at $140-145 billion. However, the country has the potential to become a global leader. The domestic CRDMO market is growing at a compound annual growth rate (CAGR) of 15%, driven by cost advantages over Western nations and project startup times that are 90% faster.
Global supply chain realignments are unlocking a $10 billion opportunity for Indian CRDMOs, as Western pharmaceutical companies seek alternative manufacturing hubs.
Government's Stance
New Delhi is expected to push for tariff parity during trade talks, arguing that the current differential treatment unfairly disadvantages Indian manufacturers. The government aims to safeguard the interests of domestic companies and ensure that India remains competitive in the global pharmaceutical landscape.
