CHENNAI: Concerns are mounting for the global pharmaceutical industry, particularly for Indian drug manufacturers that rely heavily on the US market. Following the White House's earlier announcement about boosting domestic manufacturing and the FDA’s expanded surprise inspections of factories, President Trump has indicated he will make an announcement next week regarding the cost of medicines.
Speaking to reporters at the White House on Monday, Trump stated that the US is being "ripped off" on drug prices compared to other countries, reported Reuters.
Under the Trump 2.0 administration, global pharmaceutical exporters—especially from countries like India and China—faced several key concerns due to the US's policy shifts aimed at lowering drug prices and reducing foreign dependency.
As of fiscal year 2023–24, India and China remain pivotal suppliers of pharmaceuticals to the US, with significant export values and strategic implications for global trade.
India's pharmaceutical exports reached approximately $27.9 billion in the financial year 2024, marking a 9.67% increase from the previous year. The United States accounted for over 31% of India's total pharmaceutical exports, translating to about $8.7 billion. While, China's pharmaceutical exports to the US were valued at approximately $5.2 billion in 2022.
Push for Local Manufacturing
Trump emphasised reducing reliance on foreign drug manufacturing, particularly from India and China. This included incentives for US-based pharmaceutical production, executive orders prioritising "Buy American" policies for essential drugs and pressure on federal agencies to procure medicines manufactured in the US.
Exporters feared long-term erosion of US market share as American firms and production facilities were prioritised.
Surprise FDA Inspections
The FDA under Trump intensified unannounced inspections of overseas manufacturing facilities.
Many Indian and Chinese plants were flagged for compliance issues. Import alerts or bans were imposed in some cases, disrupting supply chains.
This regulatory scrutiny increased unpredictability, raised compliance costs, and risked supply disruptions for approved drugs.
Drug Pricing Reforms and Importation Policies
Trump repeatedly criticized high drug prices and proposed aggressive reforms, including international price referencing to align US drug prices with lower global prices, allowing states to import cheaper drugs from countries like Canada, and pressure on pharma companies to reduce list prices voluntarily.
Price controls or forced reductions could squeeze margins, especially for generic and branded exporters who relied on the US for premium pricing.
National Security Framing
The administration framed dependence on foreign pharmaceuticals as a national security risk, especially during COVID-19.
There were calls to onshore the manufacturing of critical drugs and active pharmaceutical ingredients (APIs).
This narrative created a hostile policy environment for foreign suppliers, potentially resulting in restrictive legislation or reduced public procurement.
Trade and Tariff Risks
Although pharmaceuticals were not heavily targeted in trade wars, the broader protectionist stance of the administration created uncertainty.
Future tariff threats or sanctions could affect input costs or finished drug exports. Exporters feared being caught in broader US-China or US-India trade disputes, impacting business stability.
