India's booming pharma deal market may hit a rough patch due to the prevailing uncertainty over potential US tariffs on the sector, Stefano Beschi, partner and head of pharma at global investment firm Rothschild & Co, told ET in an exclusive interaction.
"I don't know where the tariffs will land, but eventually it's the uncertainty that is going to impact our job, which is M&A," Beschi said.
"M&A requires confidence and predictability of tariffs and costs and returns and so on, and without that, uncertainty will certainly lead in the short term towards a slowdown," he explained. "In the long term, I have no doubt that this is still an incredibly resilient industry," he added.
Last week, US President Donald Trump threatened that pharma tariffs are going to come in at levels "you haven't really seen before."
India is a major supplier of generic medicines to the US market, accounting for 40% of drugs consumed there, with exports worth about $9 billion. Leading Indian drug makers such as Dr Reddy's, Zydus Lifesciences, Lupin, Gland Pharma, Biocon, Sun Pharma and Cipla derive anywhere from a third to more than half of their revenue from the US.
With the situation still unfolding, companies remain in wait-and-watch mode. Industry insiders said they are mulling various options, including tapping into alternative markets and passing on part of the tariff burden to US consumers.
Despite this uncertainty, the Indian pharma and healthcare sector remains an important focus area for Rothschild.
"In the long term, this industry will always be a winner," Beschi said. "Pharma is one of the most global and interconnected sectors in terms of supply chain and development... It is a space with a lot of strong tailwinds, which are affecting positively in terms of growth."
According to him, it's a fragmented market ripe for global consolidation, "which inevitably leads to M&A."
Pharma deals in India surged by 67% in value terms to $4.8 billion in 2024 from $2.8 billion in 2023, according to data from Grant Thornton.
Beschi said: "India is in an absolutely unique position to succeed."
He said the country's attractiveness lies in its entrepreneurial ecosystem, knowledge capabilities, and English-speaking skills of a large section of the population. "They have an export sort of mentality, and that has helped a lot in developing the pharmaceutical industry. At the same time, the local market is huge and still underdeveloped," he added.
Subhakanta Bal, managing director of Rothschild & Co India, said domestic M&A in branded generics in India has gone up. "Directionally speaking, if you look at the last five-seven years, there is certainly more domestic M&A that is happening now, where some of the larger Indian players are very happy to acquire domestic companies as well as product portfolio," he said.
( Originally published on Apr 10, 2025 )
"I don't know where the tariffs will land, but eventually it's the uncertainty that is going to impact our job, which is M&A," Beschi said.
"M&A requires confidence and predictability of tariffs and costs and returns and so on, and without that, uncertainty will certainly lead in the short term towards a slowdown," he explained. "In the long term, I have no doubt that this is still an incredibly resilient industry," he added.
Last week, US President Donald Trump threatened that pharma tariffs are going to come in at levels "you haven't really seen before."
India is a major supplier of generic medicines to the US market, accounting for 40% of drugs consumed there, with exports worth about $9 billion. Leading Indian drug makers such as Dr Reddy's, Zydus Lifesciences, Lupin, Gland Pharma, Biocon, Sun Pharma and Cipla derive anywhere from a third to more than half of their revenue from the US.
With the situation still unfolding, companies remain in wait-and-watch mode. Industry insiders said they are mulling various options, including tapping into alternative markets and passing on part of the tariff burden to US consumers.
Despite this uncertainty, the Indian pharma and healthcare sector remains an important focus area for Rothschild.
"In the long term, this industry will always be a winner," Beschi said. "Pharma is one of the most global and interconnected sectors in terms of supply chain and development... It is a space with a lot of strong tailwinds, which are affecting positively in terms of growth."
According to him, it's a fragmented market ripe for global consolidation, "which inevitably leads to M&A."
Pharma deals in India surged by 67% in value terms to $4.8 billion in 2024 from $2.8 billion in 2023, according to data from Grant Thornton.
Beschi said: "India is in an absolutely unique position to succeed."
He said the country's attractiveness lies in its entrepreneurial ecosystem, knowledge capabilities, and English-speaking skills of a large section of the population. "They have an export sort of mentality, and that has helped a lot in developing the pharmaceutical industry. At the same time, the local market is huge and still underdeveloped," he added.
Subhakanta Bal, managing director of Rothschild & Co India, said domestic M&A in branded generics in India has gone up. "Directionally speaking, if you look at the last five-seven years, there is certainly more domestic M&A that is happening now, where some of the larger Indian players are very happy to acquire domestic companies as well as product portfolio," he said.
( Originally published on Apr 10, 2025 )
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