|
Indian pharma’s diversification into EU markets is acting as a buffer against US trade shocks: Parag Bhatia
|
|
Shardul Nautiyal, Mumbai
August 18 , 2025
|
|
|
Indian pharma industry’s diversification into European markets is acting as a buffer against US trade shocks, says Parag Bhatia, director, Laborate Pharmaceuticals.
Bhatia informs that Indian pharma companies have steadily diversified into Europe, the UK, Australia and other regulated markets. The European Union’s unified yet stringent framework offers two advantages, which are a large, stable demand base due to ageing populations and public health systems, and reduced single market dependence.
“By broadening European dossiers and supply contracts, exporters can reallocate volumes based on US trade barriers and avoid idle capacity. In Laborate’s case, EU GMP certified capacity at Paonta Sahib in Himachal Pradesh (HP) is being expanded to serve European tenders and private demand, creating a dual market cushion that supports revenue continuity during US policy swings,” he further informs.
India is the largest supplier of generic medicines and supplies nearly 40% of generics used in the US. Scaling US production to match that of India would take over 3 years.
“Substituting this scale domestically in the US is unlikely in the near term because FDA compliant capacity takes time and capital to build. From land acquisition and facility construction to equipment qualification and regulatory approvals, each stage carries significant lead times, typically 24 to 36 months even for experienced operators,” Bhatia explains.
He further explains that beyond physical infrastructure, there is a workforce and know how gap. India’s strength rests on decades of process expertise, cost efficiency and deeply integrated supplier networks. Replicating this ecosystem in the US would require large scale recruitment, training and technology transfer. Finally, supply chains for key inputs remain global. Even if final manufacturing shifts to the US, many active pharmaceutical ingredients (APIs) are sourced from India and China, so without securing API supply, localisation alone cannot deliver self-reliance.
Generics are the backbone of affordable care in the US, often priced 80 to 90 per cent lower than branded drugs. US Tariffs on Indian imports would raise landed costs for distributors and pharmacies. “Unlike most consumer goods, medicines allow limited absorption of cost increases; higher costs flow quickly to insurers, healthcare systems and patients. The immediate effects would likely include higher out of pocket spending for uninsured or under insured patients, upward pressure on insurance premiums as payers absorb procurement costs and a higher risk of shortages if buyers trim orders amid volatility. With hospitals and pharmacies already running lean inventories, even short disruptions can compromise treatment continuity,” Bhatia emphasizes.
Bhatia avers that the core strength of Indian pharma is vertical integration from API to finished dosage within one ecosystem. This structure lowers costs by limiting import dependence for inputs, improves reliability because producers can ramp output without waiting on cross border raw materials. This also streamlines compliance when API and formulation facilities sit under aligned regulatory systems.
“During crises such as the Covid-19 pandemic, integrated manufacturers sustained and scaled supply when fragmented models struggled. This capability underpins India’s ability to maintain uninterrupted deliveries to more than 200 countries and to step in when other suppliers falter,” he concludes.
|
|
|
|
|
|
|
|
TOPICS
|
The Food and Drug Administration (FDA), Maharashtra, has issued a public advisory urging citizens to report any misleadi ...
|
|
|
|
|