US President Donald Trump Announces 0% Tariff On Generic Medicines For Two Years; 200% Thereafter

[00:00:06]Welcome back. The other big news of the morning has come from who else but Donald Trump who announced a timeline for imposing tariffs on generic pharma drugs being brought into the country starting the 1st of August. Ekta is here and she's going to explain what does it mean for Indian pharma companies. Ekta horning.

[00:00:23]>> Morning. Uh well, you know what it means is that uh right now we just have President Trump who has tweeted on generic drugs. He's saying that there will be zero tariff for 2 years starting from August 1st. After 2 years it'll be raised to around 100% and one year for one year and then after that 200% thereafter. Now Indian generics remember is a very important part of the US system. Uh 90% of the US by volumes is generic at this point in time. India supplies around 40% of generic drugs to the US. Indian pharma exports are valued at around 10 billion dollars to the US and India has the largest number of US FDA plants outside of the US which is around 670.

[00:01:07]So this entire scenario is possibly going to be very difficult to execute as well. uh that is because the generic drug which is manufactured in India is probably one of the cheapest in the world and that kind of manufacturing cost is not rec replicable in the US. So bringing generic manufacturing to the US is difficult due to the fact that there is one constant pricing erosion which takes place in generics. There's high competition the number of dosage types and there's strict manufacturing quality. So building such a large volume capacity could also possibly take decades in order to shift generic manufacturing and the US like I mentioned has really lost the edge when it comes to generic manufacturing when it comes to labor cost setting up manufacturing and uh the overall production of a generic drug which is much cheaper in countries such as India and China as compared to the US and that's exactly why the shift had taken place to start with now companies likely in focus on account of this is Orurubindu for example that's already built a substantial local manufacturing presence in the US. So it could possibly be quite resilient in all of the sentiment negative which is taking place. Dr. Ready's Lupin, Siplas, Zidis, they have some manufacturing print in the US but not too much at this point in time. Alchem to torrent for example are fully dependent in terms of India production and hence this could possibly be a sentiment negative for companies such as them. Now Bioon depends on India and Malaysia as well in terms of manufacturing. Sen is Pharma. Uh some of the analysts have said that they could benefit because they have a local manufacturing presence for US generics.

[00:02:44]Um so that could be one stock which could be resilient. But nonetheless, the larger picture also is and the feedback that I'm getting from a lot of the top industry voices is that um let's see what the execution looks like. Let's see whether this comes in the form that do uh that President Trump has tweeted about and remember that his term also ends. So this possibly coincides with that. So let's see uh what the details are and what going forward the movement will look like as of now. Yes, it's definitely confusion and a lot of uh sentiment negative at this point but um industry is waiting and watching.

[00:03:19]>> It should have been more clarity is more confusion. Thank you for uh putting that into perspective.

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