Indian pharma companies lobby to win Donald Trump over on generic imports

Indian Pharmaceutical Alliance, which includes Sun Pharma and Dr Reddy's, says early signals from the Trump administration do not augur well

Ari Altstedter
Updated2 Mar 2017
Donald Trump’s varied pronouncements on the US health-care system represent both a threat and an opportunity for India’s $12.5 billion in annual drug exports. Photo: AFP
Donald Trump’s varied pronouncements on the US health-care system represent both a threat and an opportunity for India’s $12.5 billion in annual drug exports. Photo: AFP

Mumbai: India’s largest pharmaceutical firms are looking to convince US President Donald Trump that his promise to lower drug costs should take priority over his vow to make sure the medicines are made in America.

Savings from cheaper imported drugs will outweigh the jobs created by producing them in the US, the Indian Pharmaceutical Alliance, which represents drugmakers including Sun Pharmaceutical Industries Ltd and Dr. Reddy’s Laboratories Ltd, said in a report obtained by Bloomberg News that urged the Indian government to take action. One goal could be to win an exemption for generic drugs under any border-tax policy that is enacted in the US, it said.

“The early signals from the Trump Administration do not augur well,” the group said in a report sent to a government advisory body on 28 February, exhorting Indian authorities to lobby US lawmakers, regulators and media. It recommended that the Indian industry make its case “without ugly confrontation.”

ALSO READ | US pharma sector demands keeping India in patent violator list

Trump’s varied pronouncements on the US health-care system represent both a threat and an opportunity for India’s $12.5 billion in annual drug exports. As one of the world’s largest exporters of copycat medicines—which are generally about 80% cheaper than branded treatments—the nation could gain from a push to lower the cost of medicines in the US. At the same time, Trump has decried low-cost imports and advocated policies to support US manufacturing.

“Our drug industry has been disastrous, they’re leaving left and right,” Trump said at a 11 January press conference in New York, shortly before he took office. “ They supply our drugs, but they don’t make them here, to a large extent.”

Drug manufacturing

The main threat lies in a possible border adjustment tax being proposed by Republican lawmakers which would impose levies on imports but exempt exports to shift manufacturing jobs back to the US, according to the report.

The Indian companies aren’t alone in their concerns. Teva Pharmaceutical Industries Ltd, the world’s largest maker of cheap copycat drugs, warned that such a tax “could interfere with international trade in pharmaceuticals” and have a “material” effect on sales of the Israeli company, which manufactures most of its products outside the US.

The Indian drugmakers made their case to the National Institution for Transforming India, which describes itself as a think-tank for the government and designs long-term policies and programs. A representative for the agency couldn’t immediately be reached.

ALSO READ | Pharma industry needs to adopt more IT tools to upgrade quality standards

With drug manufacturing costs in India as much as 50% lower than in Western industrialized countries, companies in the South Asian nation claim about 20% of global generic drug exports. One opportunity the report identifies is to “fill-in-the-void” left by Trump’s drive to repeal and replace his predecessor’s health-care law, which was designed to help people who couldn’t afford medical insurance receive care.

“We do believe this is one of the industries which serve global needs and the government will take corrective action based on this communication,” Dilip Shah, secretary general of the Indian Pharmaceutical Alliance, said by phone, referring to potential steps India’s government could take to support the sector.

Sun Pharmaceutical, Dr. Reddy’s and Lupin Ltd, India’s three largest drugmakers, are all members of the IPA, which represents 20 of the nation’s largest pharmaceutical companies. Spokesmen at all three firms didn’t respond to calls and emails requesting comment.

In his inaugural address to Congress this week, Trump reiterated his desire to reduce high drug prices and said he wants to speed up drug approval processes at the US Food and Drug Administration.

ALSO READ | India engaging more with global regulators to improve drug quality norms

As part of its charm offensive, the Indian companies recommend their government highlight the firms’ investments in the US, where the largest companies have increased their presence in recent years in an attempt to diversify their manufacturing base. The IPA’s members now employ almost 4,000 people in their US operations and have invested about $9 billion since 2011, according to the report.

Closer collaboration with the FDA is also recommended to help the industry solve deficiencies in manufacturing practices that have prompted a wave of sanctions from the regulator in recent years, hurting the industry’s reputation and sales.

Indian drug companies have to “show containment of US health-care expenditure as beneficial over local employment,” the report said. “The approach should be to project India as a reliable and trustworthy source for access to safe and quality medicines at affordable prices.” Bloomberg

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