Hyderabad pharma companies tread carefully after Trump's tariff announcement

Hyderabad: Hyderabad-based pharmaceutical companies are cautiously navigating the situation following the announcement of 100 per cent tariffs by US President Donald Trump, which currently target only branded and patented drugs.

Industry view this as an opportunity to step up trade negotiations with other countries, diversify export markets, and invest more heavily in complex generics and biosimilars.

Since local companies primarily focus on manufacturing low-cost generic drugs, they remain largely unaffected by these tariffs.

However, Hyderabad pharmaceutical manufacturers are proceeding with caution. While the current exemption for generics protects their existing business operations, the real concern lies in whether the US will later redefine or expand the scope to include complex generics or other pharmaceutical categories.

In response to this uncertainty, several companies are actively exploring US-based manufacturing partnerships to ensure business continuity and regulatory compliance.

Telangana has established itself as a global pharmaceutical hub, exporting vaccines and pharmaceutical products to over 150 countries through 214 USFDA-approved manufacturing facilities. The state contributes approximately one-third of India's total pharmaceutical production and accounts for one-fifth of the country's pharmaceutical exports.

Hyderabad serves as the epicenter of this pharmaceutical ecosystem, housing over 800 industrial pharmaceutical units. The city is home to renowned firms including Dr. Reddy's Laboratories, Aurobindo Pharma, Hetero Drugs, Laurus Labs, and MSN Pharmaceuticals.

The United States emerged as the top destination for merchandise exports from Telangana during the 2023-24 fiscal year, with pharmaceuticals accounting for 32 per cent of total exports.

According to Telangana's Socio Economic Outlook 2024, the US captured the largest market share, receiving 28.16 per cent of the state's total exports.

The UAE followed at a distant second with 6.90 per cent, while China accounted for 5.20 per cent.

For instance, Dr. Reddy's Labs maintains a large generics portfolio in North America's dermatology segment and operates a facility in Middleburgh, New York, that manufactures active pharmaceutical ingredients.

"President Trump's 100% tariff on branded and patented pharmaceutical imports is a wake-up call for global pharma exporters," said Ram Chintalapudi, Founder & CMD of Hyderabad-based Skinska Pharmaceutica. "While India's generics remain largely insulated for now, the move signals a shift toward protectionism that could reshape future access," Ram told DH.

Ram noted that Skinska's USFDA and UK Cosmetic Regulations approvals position the company to navigate this turbulence with agility. "We remain committed to affordable innovation and are actively exploring US-based manufacturing partnerships to ensure continuity and compliance. India's strength lies in quality, scale, and adaptability—and this is our moment to reinforce it," he added.

During fiscal year 2023-24, Telangana's merchandise exports reached Rs 1,16,182 crore, with pharmaceutical products alone contributing 32% of this total—equivalent to Rs 36,893 crore. Pharmaceutical products lead the export categories, followed by organic chemicals, which generated Rs 23,257 crore in exports and contributed 20% to the state's total export value.

Dr D. Srinivas Reddy, Chairman of Optimus Pharma, provided a measured assessment of the situation. "The immediate impact on India from the pharma tariffs could be limited, as India is the world's largest producer of generic drugs and supplies nearly 20% of global demand. However, top Indian pharma companies have been attempting to move up the value chain with an increasing focus on patents and novel drugs," Dr Srnivas Reddy told DH.

He explained that the new tariff mainly targets branded drugs and doesn't immediately affect Indian generic exports, which comprise most of India's shipments to the US. "For Telangana's pharma industry, the impact is also expected to be limited, since its exports to the US are heavily generic and therefore exempt. Still, the impact isn't entirely negligible, as any shift in policy could affect companies with exposure beyond generics," he said.

Dr. Reddy emphasised that while the tariff isn't likely to hurt Indian pharma significantly in the short run, it does create uncertainty for the future. "The exemption for generics protects current business, but the real risk is whether the US later redefines or expands the scope to include complex generics or other categories," he added.

Ram Chintalapudi, whose company exports USFDA and UK Cosmetic Council-approved products to the US and UK, highlighted the critical role of generics in American healthcare. "Generics form the backbone of US healthcare, filling nearly 90% of all US prescriptions and ensuring medicine remains affordable for millions of Americans."

He warned that imposing tariffs on generics would dramatically drive up costs for US patients, strain public health budgets, and create severe drug shortages, especially for critical therapies. "That's why both US regulators and policy experts recognize the importance of keeping the generic supply chain—which India leads globally—robust, competitive, and insulated from such measures," he said.

While acknowledging that the move has spurred short-term stock market anxiety and uncertainty, he maintained that fundamentals remain strong since India's main revenue derives from generics, where the US lacks sufficient domestic capacity and cost efficiencies. However, he cautioned that any future extension of tariffs to generics would pose systemic risks to both countries.

"Strategically, this signals the need for India to step up trade negotiations, diversify export markets, and invest even more in complex generics and biosimilars—fields where tariff risk may eventually arise, but also where innovation and diversification offer resilience," he added.

Telangana is considered a major hub for the life sciences and pharmaceutical industries, producing one-third of India's pharmaceutical products and contributing to one-fifth of the country's pharma exports.