**New Delhi**: Indian pharmaceutical companies may struggle to transfer tariff costs to US consumers if imposed, warns Amit Varma of Quadria Capital. He stresses the vital role these firms play in the US market and the potential disruptions tariffs could cause to supply chains.
Indian pharmaceutical companies may face significant challenges in passing on tariff costs to US consumers if the Donald Trump administration chooses to impose such tariffs, according to Amit Varma, managing partner at Quadria Capital. Speaking to NDTV Profit, Varma highlighted the critical role Indian firms play in supplying “life-threatening drugs” to the US market, emphasising the potential repercussions of tariffs on supply chains.
Varma expressed concern that any disruption in supply chains could instigate a considerable public outcry, urging efforts to find ways to circumvent such challenges. He warned that if tariffs reach double-digit levels, there would likely be a negative impact on the balance sheets of Indian pharmaceutical companies.
He further commented on the difficulty of completely relocating manufacturing and supply chains to the US, stating that “it is hard to pull off a complete shift”. Varma pointed out that such a transition would take a long time due to the complex nature of these operations and the difficulty of replicating India’s established cost and price efficiencies.
Moreover, he discussed the dynamics within the contract development and manufacturing organisation (CDMO) sector, noting that contracts in this space are typically long-term commitments. Varma suggested that, in light of India’s inherent cost efficiency, it is unlikely that US clients would abandon these partnerships, even if there are slight reductions in operating margins. Thus, while the potential imposition of tariffs could pose challenges, the established relationships and efficiencies may offer some resilience for Indian pharmaceutical firms.
Source: Noah Wire Services
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