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Key Points

The Indian pharmaceutical sector is navigating significant uncertainty caused by potential US tariffs. A new report suggests companies need to implement price increases and transfer intellectual property to manage this challenge. While raw material costs are falling in some areas, margin pressures are appearing in the US market. Firms remain cautiously optimistic about new growth avenues like GLP-1 drugs and CDMO services to offset these near-term headwinds.

Key Points: Indian Pharma Needs Price Hikes and IP Transfers for US Tariffs

  • Report highlights US tariff uncertainty hindering new capacity additions
  • Companies seek price hikes and IP transfers as key mitigation tools
  • Raw material prices are correcting sharply in antibiotic categories
  • Strong RFP activity continues for CDMO and custom synthesis services
2 min read

Indian pharma sector needs price hikes, site and IP transfers to tackle US tariff uncertainty: Report

A Systematix Research report details how Indian pharma companies are tackling US tariff uncertainty through price increases, site transfers, and cautious growth strategies.

"Price increase, site and IP transfers are the three tools the industry requires to deal with the tariffs. - Systematix Research Report"

New Delhi, September 9

The Indian pharmaceutical industry requires price increases, site and intellectual property (IP) transfers to deal with the prevailing uncertainty in the sector amid US tariffs, according to a report by Systematix Research.

The report highlighted that tariff uncertainty continues to prevail, with companies unwilling to add capacities in the US.

It stated, "Price increase, site and IP transfers are the three tools the industry requires to deal with the tariffs."

At the same time, raw material prices are correcting sharply in certain categories, particularly antibiotics, while customers are destocking to take advantage of lower prices. Overall, generic API prices have stabilized.

The report further noted that companies remain hopeful yet cautious around new growth avenues and product launches, which could help them offset the erosion in high-value launches.

On the CDMO front, requests for proposals (RFPs) for custom synthesis and CDMO services remain strong. Multiple companies are also eyeing GLP-1 opportunities in India and emerging markets, preparing for a day-one launch.

Meanwhile, firms continue to cautiously evaluate inorganic growth opportunities. Demand for anti-infectives in domestic markets remained weak during the quarter, while building over-the-counter (OTC) platforms continues to be a key focus area.

On the earnings front, the report stated that 1QFY26 was weak, with underperformers outnumbering outperformers. Most players recorded mid-to-high single-digit growth in India pharma (organic). However, the US geography witnessed margin pressures, as price erosion began.

Among the outperformers, Sun Pharma (SUNP) exceeded expectations due to lower operational costs. India business was strong, but US generics came in weaker than expected. Pfizer (PFIZ) saw growth returning at 7 percent, which along with lower operational costs, helped it outperform.

Similarly, Syngene (SLPA) generated higher-than-expected contribution from licensing income, leading to stronger margins.

On the weaker side, Orchid Pharma (ORCP) was impacted by an adverse hit on industry-wide cephalosporin API volumes, likely due to customer inventory destocking in anticipation of price correction.

Piramal Pharma (PLM) faced heavy pressure on its export business due to dumping by China. Dr. Reddy's Laboratories (DRRD) saw weakness in its high-value US generic business, which impacted margins. Divi's Laboratories (DIVI) reported in-line revenue but with slightly weak margins.

The report concluded that the Indian pharma sector continues to face near-term uncertainty, though companies are positioning themselves for long-term growth opportunities.

- ANI

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Reader Comments

P
Priya S
Indian pharma companies have shown remarkable resilience over the years. The focus on R&D and IP transfers is the right approach rather than just competing on price. Quality over quantity! 🇮🇳
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Aman W
The China dumping issue is really concerning. Our companies need government support to compete fairly. At the same time, we must ensure our domestic manufacturing capabilities are strengthened. Make in India should extend to pharma too!
S
Sarah B
Interesting analysis. The GLP-1 opportunities mentioned could be a game-changer for Indian pharma. Diabetes is such a huge problem in India, and if our companies can develop effective treatments, it would be fantastic for both business and public health.
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Vikram M
Sun Pharma and Dr. Reddy's have been pillars of our pharma sector. Their performance despite challenges shows why India is called the pharmacy of the world. Hope they continue to innovate and grow! 💊
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Nikhil C
The raw material price correction is good news. Hopefully this translates to more affordable medicines for common people. The OTC platform focus is also smart - Indians are becoming more health conscious and willing to spend on preventive care.

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