Mumbai, March 28 || Indian pharma companies may stand to gain market share due to the potential impact of US tariffs, according to a JPMorgan report.
Essentially, Indian pharmaceutical companies have the potential to gain market share at the expense of their global competitors due to their superior cost competitiveness, JPMorgan said.
In an expert call, the brokerage also pointed out that the possibility of manufacturing relocation by pharmaceutical companies to the US is unlikely due to higher tariffs.
Tariffs of 25 per cent or higher on pharmaceuticals are improbable due to the significant increase in cost for consumers and the limited availability of alternative suppliers, JPMorgan said.
In the event of a 10 per cent tariff, a substantial portion is expected to be passed on to customers as there is a consistent demand for drugs.
The remaining portion of the tariff will likely be absorbed by manufacturers or Pharmacy Benefit Managers.
Since pricing contracts for manufacturers are typically based on the landed cost of drugs, this supports the likelihood of a higher pass-through to consumers.
The tariff increase is anticipated to result in higher drug costs and, in the medium term, increased insurance premiums for patients in the US. If tariffs persist, larger Indian pharma companies might consolidate to enhance their negotiating power, but they are unlikely to exit the market, the brokerage said.