High Pharma Costs Questioned as US Tariff Threat Looms

Biocon's Siddharth Mittal challenges the feasibility of relocating pharma manufacturing to the US from China and India. Highlighting cost differences, Mittal notes the US reliance on Indian drugs and the sector's price sensitivity. US tariffs could compel firms to relocate, despite higher operational costs.

Siddharth Mittal, CEO and Managing Director of Biocon Limited, raised concerns on Friday about the feasibility of shifting pharmaceutical manufacturing to the United States from countries like India and China, where costs are significantly lower. Speaking at the Carnegie Global Technology Summit, Mittal questioned who would bear the financial burden of such a move.

"The cost of manufacturing in China is a cost-effective measure developed over decades," Mittal stated. "In India, the cost is about 1.25 to 1.3 times that of China's, and if production shifts to the US, the expenses could double. The question remains, who will pay this hefty price?" He underscored that half of the drugs in the US market are imported from India, a critical supplier for American consumers. Most Indian pharma firms have already established manufacturing units in the US.

Mittal pointed out the US's role as a major market but one that's highly sensitive to price changes. He lauded the country's robust research ecosystem and highlighted the interdependence between Indian and American pharmaceutical enterprises. He also noted India's continued reliance on China for 70 percent of its active pharmaceutical ingredients.

US President Donald Trump had previously signaled tariffs on pharmaceuticals to encourage domestic production and lessen dependency on foreign manufacturing. "We will announce major tariffs that will incentivize companies to move operations to the US," Trump stated, emphasizing the country's substantial market size and potential leverage.

Indian generic drug manufacturers are pivotal to the US healthcare infrastructure, providing nearly 40 percent of the imported generic drugs. In fiscal year 2024, Indian pharmaceutical exports to the US were valued at around USD 8 billion, growing at an 8 percent CAGR over the past decade. (ANI)

(With inputs from agencies.)