Indian drugmakers lobby to win Trump over on generic imports

Bloomberg

India’s largest pharmaceutical firms are looking to convince US President Donald Trump that his promise to lower drug costs should take priority over his vow to make sure the medicines are made in America.
The Indian Pharmaceutical Alliance, an industry group representing 20 of the nation’s largest drugmakers, is recommending India make the case to US lawmakers, regulators and media that the cost savings of cheaper imported drugs outweigh employment gains from producing them at home, according to a report obtained by Bloomberg News which was sent to an Indian government body. One goal for the Indian government could be to win an exemption for generic drugs under any border-tax policy that is enacted, the report said.
“The early signals from the Trump Administration do not augur well,” the group said in a report sent to the National Institution for Transforming India, a government advisory body, on Feb. 28. It recommended that the Indian industry make its case “without ugly confrontation.”
Trump’s varied pronouncements on the US health-care system and pharmaceutical industry represent both a threat and an opportunity for India’s $12.54 billion a year in drug exports. As one of the world’s largest exporters of generic drugs — which are generally about 80 percent cheaper than brand-name equivalents — the Indian industry could gain from a push to lower the cost of medicines in the US At the same time Trump has decried imports from low cost countries, the kind of arbitrage which constitutes India’s main competitive advantage, and advocated policies to ensure what’s consumed in the US is made there.

Drug Manufacturing
The main threat identified in the report is a possible border adjustment tax being proposed by Republican lawmakers which would
tax imports but exempt exports to shift manufacturing jobs back to the US. The report recommends India seek an exemption for generic
drug imports should this idea become a reality.
The National Institution for Transforming India describes itself as a think-tank for the Indian government, and designs long-term policies and programs. A representative
for the agency couldn’t immedi-
ately be reached.
With drug manufacturing costs in India as much as 50 percent lower than in Western industrialized countries, the Indian industry now claims about 20 percent of global generic drug exports. One opportunity the report identifies is to “fill-in-the-void” left by Trump’s drive to repeal and replace his predecessor’s health-care law which was designed to help people who could not afford medical insurance receive care.
“We do believe this is one of the industries which serve global needs and the government will take corrective action based on this communication,” Dilip Shah, secretary general of the Indian Pharmaceutical Alliance said by phone, referring to potential steps India’s government could take to support the sector.
Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd. and Lupin Ltd., India’s three largest drugmakers, are all members of the IPA. Spokespeople at all three firms did not respond to calls and emails requesting comment.
In his inaugural address to Congress this week Trump reiterated his desire to reduce high drug prices and said he wants to speed up drug approval processes at the US Food & Drug Administration.
As part of its charm offensive the industry recommends its government highlight Indian firms’ investments in the US, where the largest companies have increased their presence in recent years in an attempt to diversify their manufacturing base. The IPA’s members now employ almost 4,000 people in their US operations and have invested about $9 billion since 2011, according to the report.
Closer collaboration with the FDA is also recommended to help the industry solve deficiencies in manufacturing practices that have prompted a wave of sanctions from the regulator in recent years, hurting the industry’s reputation and sales.
Indian drug companies have to “show containment of US health-care expenditure as beneficial over local employment,” the report said. “The approach should be to project India as a reliable and trustworthy source for access to safe and quality medicines at affordable prices.”