Customers may bear some cost of the U.S. tariff rise, says Natco Pharma CEO Rajeev Nannapaneni

The pharmaceutical sector is one of India’s biggest export earners. However, Fitch Ratings has warned in a new Fitch Wire report that the pharma industry will come under strain if the United States announces fresh tariffs.

The rating agency mentioned that while Indian corporates generally have low direct exposure to current US tariffs, the pharma sector remains vulnerable to future trade measures.

Also read: Ashwini Vaishnaw introduces Online Gaming Regulation Bill: Will it put $25-billion sector and 200,000 jobs at risk? (startuppedia.in)

Nat Pharma vice-chairman addresses concerns regarding US tariff

Hyderabad-based Natco Pharma’s vice-chairman and CEO Rajeev Nannapaneni responded to queries to The Hindu and admitted that the US is the most important pharmaceutical market in the world, particularly for some products that account for around two-thirds of the business.

“You can’t ignore 60-70% of the business and run your business,” he said, while pointing out his company’s ongoing efforts to build a business outside the U.S.

Natco Pharma recently announced it will be acquiring a 36% stake in South African pharmaceutical company Adcock Ingram Holdings (AIHL) for $226 million (around ₹2,000 crore).

The firm is expecting that its investment will contribute to a “significant part of our base earnings”.

“I would believe South Africa will easily be about 15-25% of the base earnings. So we are diversifying away from the U.S. as well. It’s not that we are not. But again, you can’t ignore U.S. at the same time. So you have to play both the cards,” the Natco Chief said.

However, when he was asked about the impact of tariffs, Nannapaneni shared how it would not be easy to pass through immediately, considering the contracts and pricing.

In the long run, he disclosed, “We would like to pass it on to our customers because the margins that we work on most of our products are very low. So, there will be some little bit of disruption initially, but I think eventually we will figure out after a quarter.”

Also read: L&T Chairman opens up on facing backlash for 90-hr workweek and ‘How long can you stare at your wife?’ remarks (startuppedia.in)