Trump targets Big Pharma with drug price order; Indian generics seen gaining edge

US President Donald Trump’s move to slash prescription drug prices by tying them to rates in countries such as the UK and Germany may rattle multinational pharmaceutical giants, but it is unlikely to hurt India’s generic drug exporters, says Biocon Executive Chairperson Kiran Mazumdar-Shaw. In fact, she believes it could offer fresh opportunities for India in contract research.

“The order is really aimed at innovator drugs which are priced higher in the U.S. than in Europe or other developed countries. It’s not about generics or biosimilars,” Mazumdar-Shaw told Business Today, calling it a “targeted attempt” to correct global price distortions created by large multinational drugmakers.

The executive order, which seeks to implement international reference pricing for select high-cost drugs, is part of a broader push by the Trump administration to rein in healthcare costs — an issue that has gained urgency in the run-up to the presidential election.

While concerns have emerged over potential US tariffs on Indian pharmaceutical products as part of evolving trade negotiations, Mazumdar-Shaw downplayed the risk. “Even if tariffs are introduced, the levels being discussed — between 2.5% and 10% — are not prohibitive. Indian companies can absorb such levies thanks to economies of scale. Our pharma sector is resilient and has handled much bigger challenges in other markets,” she said.

In FY24, India’s pharmaceutical exports rose by 9.67% year-on-year to $27.9 billion, up from $25.4 billion in FY23, according to data from the commerce ministry.

The United States continued to be the largest importer, accounting for over 31% of these exports. Looking ahead, the Pharmaceuticals Export Promotion Council of India (Pharmexcil) projects that pharmaceutical exports will grow by more than 11% to reach $31 billion in FY25, driven by strong demand in key markets such as the US and the UK, along with a resurgence in orders from African nations.

India’s pharmaceutical industry is currently the third largest in the world by volume and 13th by value, manufacturing more than 60,000 generic drugs across 60 therapeutic categories. The sector is expected to expand to around $130 billion by 2030.

Mazumdar-Shaw also pointed to a parallel reform effort underway in the US: reducing the influence of intermediaries which she says could help cut end-user costs. 

On whether new incentives for domestic manufacturing in the US might shift the production base away from countries like India, she was sceptical. “Even if companies move manufacturing to the US to avoid tariffs, the costs are still significantly higher than in India. So, it nullifies the benefits of such a shift,” she said.

A more significant outcome of the price equalisation push, Mazumdar-Shaw believes, could be reduced R&D spending by large pharmaceutical firms in developed markets. That, in turn, may accelerate outsourcing to low-cost, high-quality contract research destinations such as India. “If Big Pharma cuts back on internal R&D to save costs, they will look to countries like India for more affordable contract research services. We’re well positioned to benefit,” she said.

India’s contract research and manufacturing (CRAMS) market is expanding steadily, offering a viable alternative for global companies facing pricing pressure. Biocon’s own subsidiary, Syngene, is a major player in this space. India’s CRAMS market is estimated at $20 billion and growing rapidly as multinational drug companies look to outsource more to stay profitable.

Biosimilars, too, are expected to gain ground as healthcare systems worldwide look for cost-effective alternatives to expensive biologics. Indian firms such as Biocon Biologics, Dr. Reddy’s, and Lupin have a growing portfolio of USFDA-approved products in oncology, diabetes, and immunology.

Mazumdar-Shaw remains confident that the evolving US policy landscape won’t derail India’s pharma momentum. “India has a well-diversified export base and is strong across developed and emerging markets. This move won’t change that,” she said.