Who's going to pay price to bring back manufacturing in US, asks Biocon MD amid possibility of tariffs on pharma

"I think we all know that manufacturing for all segments moved to China, which was a cost arbitrage over decades. And now you're trying to reverse it. So, there's a price to pay," Siddharth Mittal said, speaking at the Carnegie Global Technology Summit.

"And in our industry, I'll give you an example, that if a drug in is made at X price in China, it's 1.25 to 1.3 X in India. And the analysis we have done is if we have to do the same thing in the US, it's going to be 2X. So, who's going to pay the price to bring back manufacturing in the US?" he asked.

He said 50 percent of the drugs in the US come from India, indicating that the US is a key market for Indian pharmaceutical products. Most Indian companies have set up manufacturing plants in the US.

"US is biggest market for us, but it is very price sensitive. The US has a great research ecosystem. We have the talent, and India has a good understanding of the entire ecosystem. US, of course, has a great research ecosystem, and I think that's where I see a first opportunity," he said.

He also spoke about the dependence of China on active pharma ingredients.

"India is still dependent 70 per cent on China to procure starting materials or raw materials. So if we do not address the entire value chain, we will not fix the problem," he supplemented.

Earlier, on April 9, while speaking at the National Republican Congressional Committee dinner, US President Donald Trump warned of impending tariffs on Pharma.

"Tariffs on pharma will be there because we don't make our own pharma drugs; they are made in another country. The same packet in the US is priced at USD 10 or more. We are going to tariff pharma in such a way that companies will come rushing to us very soon. The advantage we have is, we are very big market. Very shortly, will announce a major tariff on pharma, and when these companies hear that, they will leave China and other countries because most of their products are sold here. And they will be opening their plants here," Trump said.

Indian generic drug manufacturers play a significant role in the U.S. healthcare system, supplying nearly 40 percent of the generic drugs imported into the country. In FY24, Indian pharmaceutical exports to the U.S. were valued at approximately USD 8 billion, with the industry witnessing an 8 percent compound annual growth rate (CAGR) over FY15 -24. (ANI)