Balancing MAGA and MIGA

Pharma experts scouring the joint statement issued at the end of the talks between Prime Minister Modi and President Trump seized on para 18 of the 33-point statement which expands on the US-India TRUST (Transforming the Relationship Utilising Strategic Technology) initiative.

The joint statement released by the Prime Minister’s Office, stated that the leaders also committed, as part of the TRUST initiative, to build trusted and resilient supply chains, including for semiconductors, critical minerals, advanced materials and pharmaceuticals. As part of this effort, the leaders plan to encourage public and private investments to expand Indian manufacturing capacity, including in the US, for active pharmaceutical ingredients (APIs) for critical medicines. These investments will create good jobs, diversify vital supply chains, and reduce the risk of life-saving drug shortages in both the US and India, as per the statement.

US President Trump is also threatening to levy 25 per cent tariffs on pharma imports (as well as automobiles and semiconductors) from April 2, clearly pushing India’s pharma companies to subscribe to his Make America Great Again (MAGA) policy rather than Prime Minister Modi’s Make India Great Again (MIGA). 

US legislators are planning to further sweeten the deal for generics pharma companies. On February 20, Congresswoman Claudia Tenney reintroduced the Producing Incentives for Long-term Production of Lifesaving Supply of Medicines (PILLS) Act to promote the domestic production of generic medicines, offering pharma companies various tax incentives to enable them to shift all aspects of the manufacturing process for generic medicines, including materials and testing, to the US. 

Sounds familiar? That’s because the PILLS Act seeks to do exactly what India’s Production Linked Incentive (PLI) Scheme proposed: incentivise manufacturers, across sectors, with financial incentives to invest and Make in India, aiming to boost domestic manufacturing, reduce imports, and increase employment.

According to a media release, the generic drug industry is ‘centralising production in India and China due to their significantly lower costs and looser manufacturing standards’ which is raising ‘serious concerns about potential supply chain disturbances and inadequate drug safety measures.’ 

Justifying the PILLS Act, the release quoted Congresswoman Tenney as saying, “Drug manufacturing has moved overseas, putting American jobs and the security of our essential medical supply chains at risk. To address this, I reintroduced the PILLS Act, which incentivises businesses to produce critical generic medications and antibiotics here in the US. By strengthening tax incentives for domestic drug production, this legislation will help prevent dangerous supply chain disruptions, reinforce our pharmaceutical security, and will create American jobs.”

The reintroduction of the PILLS Act has predictably garnered support from lobby groups like the Coalition for a Prosperous America (CPA) and Securing America’s Medicines and Supply

Hailing the PILLS Act as “a critical step toward reshoring America’s generic drug production and reducing our dangerous dependence on foreign suppliers,” Zach Mottl, Chairman of the Coalition for a Prosperous America (CPA) pointed out that since 2002, imports from India have increased 35 times, while imports from China have surged 165 times over that same period. According to him, “Passing the PILLS Act is a necessary first step to reverse this trend, restore American pharmaceutical production, create high-quality jobs, and protect national security by ensuring a safe, reliable domestic supply of high-quality generic medicines, antibiotics, and other essential drugs.”

David Sanders, Founder and Board Member, Securing America’s Medicines and Supply and Vice President of Coherus BioSciences, commented that the PILLS Act, aims for “strategically incentivising reshoring of essential medicines including generic drugs, biologics, and biosimilars through tax credits proposed in the legislation. Equally important, the PILLS Act will create more American jobs, reduce our nation’s overreliance on foreign production, and improve patient access to essential medicines.”

The facts speak for themselves. McKinsey & Company’s latest report, ‘Shaping the future of India’s pharmaceutical operations’, shows that stronger investments in world-class infrastructure has led India to surpass the US in the number of FDA-registered generic manufacturing sites, having grown at 2.6 per cent CAGR. India now has a network of 752 FDA-approved, 2,050 WHO GMP-certified, 286 EDQM-approved plants in 2024. As per data from the Pharmaceuticals Export Promotion Council of India (Pharmexcil), the US made up nearly 31 per cent of India’s pharma exports, a sizeable $8.73 billion in FY2024. Ironically, tariffs on imported generics will trigger shortages, just the situation that President Trump seeks to avoid. Moving API manufacturing to the US will take time. The hope is that bilateral trade talks will find a middle path. As a statement from Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance (IPA) indicates, “The proposal regarding reciprocal tariffs is currently under talks and is being examined. This matter will be discussed through bilateral engagements between the two countries, and further steps will be determined accordingly.” The IPA statement also pointed out that ensuring the continued availability of affordable medicines remains a shared priority for both nations.

India’s pharma companies with huge exposure to the US market will need to re-strategise future investments in the US in sync with these policy changes. At the same time, they cannot do this at the expense of other geographies, including their home market, India. Clearly, India Pharma Inc will have to find an optimal balance between MAGA and MIGA, as both markets are important growth drivers.

Viveka Roychowdhury, 

Editor

viveka.r@expressindia.com 

viveka.roy3@gmail.com