Siddharth Mittal, CEO and Managing Director of Biocon Limited, expressed concerns about the feasibility of shifting pharmaceutical manufacturing from India and China to the US, due to the significant cost difference. He stated that if a drug is manufactured in China, it costs 1.25 to 1.3 times less than in India, and even more in the US, which would require someone to pay the price to bring back manufacturing to the US.
Mittal pointed out that the US is a key market for Indian pharmaceutical products, with 50% of drugs in the US coming from India, and most Indian companies having set up manufacturing plants in the US. However, the US market is price-sensitive, and Indian companies would need to be competitive to sustain operations.
India’s dependence on China for active pharmaceutical ingredients (APIs) was also highlighted, with Indian companies relying on China for 70% of their starting materials or raw materials. Mittal emphasized the need to address the entire value chain to address this issue.
The discussion came amidst warnings from US President Donald Trump about impending tariffs on pharmaceuticals, which could be implemented as a way to encourage companies to manufacture in the US. Trump stated that the tariffs would be applied to pharmaceuticals that are made in another country, including China, and that companies would be forced to open plants in the US to avoid the tariffs. Indian generic drug manufacturers play a significant role in the US healthcare system, supplying nearly 40% of the generic drugs imported into the country. The industry has experienced an 8% compound annual growth rate (CAGR) over the past decade.