Indian drug makers, who earn almost 50% of their revenues from the American market, are keeping their fingers crossed after US President Donald Trump told multinational drug makers that they were charging “astronomical” prices.
At a White House meeting on Tuesday, Trump met senior management representatives from leading multinational pharmaceutical companies including Merck & Co CEO Ken Frazier, Eli Lilly CEO Dave Ricks, Celgene CEO Bob Hugin and Pharmaceutical Research and Manufacturers of America CEO Stephen Ubl.
“You folks have done a very great job over the years but we have to get the prices down,” Trump told the CEOs. He has also threatened to have the government directly negotiate prices with the industry in order to get better bargains and steeper international competition to lower prices.
Though Indian pharmaceutical industry, see Trump’s bashing of American Big Pharma industry as an opportunity , it is also cautious due to possibility of pricing pressure in their most profitable market.
Moreover, Indian companies may also face restrictions and higher import taxes as the US is set to promote indigenous manufacturing.
“Currently the situation is fluid. We would like to wait and watch. There will be more clarity once the policy is spelt. However, Indian companies are unlikely to be significantly impacted because our prices are already very low and it will be difficult for American companies to compete with that,” said Pankaj Patel, CMD of Cadila Healthcare, one of the major Indian suppliers of generic medicines to the US.
Most of the major Indian Pharmaceutical Companies including Cadila Health, Sun Pharma, Lupin, Cipla, Glenmark and Dr Reddy’s earn the significant part of their total sales from the American market. Estimates show that exports to the US contribute over 50% of the around Rs 1 lakh crore pharmaceutical exports from India. So, any major policy development involving the pharmaceutical sector in the US is bound to have implications on revenues of the Indian drug manufacturing industry.
However, Indian drug makers say the current move by the US President is targeted at the US companies selling drugs at exorbitant prices, while manufacturing them outside the US at much cheaper cost.