Why in news?

The Indian pharmaceutical sector, heavily reliant on the U.S. — which accounts for over 31% of its exports and sources nearly half of its generics from India — faces serious concerns over potential U.S. sector-specific duties.

With the global generic market projected to reach $614 billion by 2030, ongoing trade negotiations with Washington are crucial for the industry’s future.

Policymakers worry that U.S. tariff threats could undermine India’s role as a key global supplier of affordable medicines, raising broader questions of public interest and long-term viability.

What’s in Today’s Article?

• India’s Contribution to Affordable Healthcare
• U.S. Tariff Threats and Indian Pharma’s Stakes
• Need for a Strategic Shift in Trade Negotiations
• Conclusion: Championing Public Health as a Global Good

India’s Contribution to Affordable Healthcare

• India supplies about 20% of all generic drugs and is known as the “pharmacy of the world.”
• It produces affordable versions of brand name medicines, which are widely prescribed around the world.
• Indian generics already dominate U.S. prescriptions, accounting for over 90% in areas like diabetes, anxiety, depression, and cancer.
• They saved the U.S. healthcare system $219 billion in 2022 alone, and nearly $1.3 trillion between 2013 and 2022 — underscoring India’s indispensable role in global healthcare affordability.

U.S. Tariff Threats and Indian Pharma’s Stakes

• The U.S., India’s largest pharmaceutical export market, sources nearly half of its generics from India, making tariff threats a major concern for policymakers.
• With the global generic market projected to reach $614 billion by 2030, the outcome of U.S.–India trade talks is critical for the industry’s future and global access to affordable medicines.
• Commentators suggest India should use its pharmaceutical strength in bilateral trade negotiations, positioning Indian generics as a global public good.
  • To do so, India must recalibrate its trade and investment strategy while mobilising public opinion in the U.S. and beyond.
• Key U.S. Concerns in Negotiations
  • The Trump administration’s main concerns are high drug prices in the U.S. and India’s intellectual property (IP) regime.
  • It is pushing international reference pricing (IRP) to cut drug prices, while also seeking stronger IPR protections that extend monopolies for Big Pharma.
  • This would raise drug costs and delay generic entry into global markets.
  • The U.S. also demands extended patent exclusivity and stricter data protection beyond TRIPS requirements, using FTAs as leverage.
  • So far, India has resisted such norms and must continue safeguarding TRIPS flexibilities, including compulsory licensing provisions.
  • To safeguard exports, India is prepared to make concessions, including supplying generics at 20–25% of branded prices for three years after patent expiry, followed by further 10–15% reductions over seven years.

Need for a Strategic Shift in Trade Negotiations

• India must move beyond a transactional approach in its Bilateral Trade Agreement (BTA) talks with the U.S.
• The Indian Pharmaceutical Alliance (IPA) had proposed reducing import tariffs on U.S. pharma products to zero, but this fell flat as U.S. concerns lie elsewhere.
• Despite earlier exemptions, President Trump imposed levies of 26% plus penalties of 25% on Indian pharma imports, signalling that financial incentives alone cannot resolve issues.
• India’s Negotiating Capital
  • India has long upheld its patent laws against foreign pressure and now holds negotiating capital to make a strategic move.
  • By highlighting the global public good created by Indian generics, India can strengthen its bargaining power.
  • Offering joint ventures in the pharma sector not just to the Global South but also to the U.S. and EU could recalibrate the trade dynamic in India’s favour.
• Diversification of Markets
  • India must diversify pharma trade and investment beyond the U.S., tapping into growing markets in West Asia, Central Asia, Africa, South America, China, Russia, and ASEAN.
  • Overseas investments with social impact can build stronger global alliances and reduce dependence on U.S. markets.
• Focus on Technology Transfer and R&D
  • India should link price reductions on generics supplied to the U.S. with demands for technology transfer, voluntary licensing, and collaborative R&D.
  • The India–U.S. TRUST (Transforming the Relationship Utilizing Strategic Technology) initiative should be directed toward biotechnology, pharma manufacturing, and innovation partnerships.

Conclusion: Championing Public Health as a Global Good

• India must resist unreasonable U.S. demands while promoting generics as a global public good.
• By pursuing joint ventures worldwide, especially with the Global South, India can expand its role as a key supplier of affordable essential medicines.
• This strategic move would protect public health, secure domestic industry interests, and position Indian pharma as a global leader.