Since the election victory of President-elect Donald Trump, the dollar has been extremely strong. If the upward trend in the exchange rate between the won and the dollar continues, it is expected to positively impact the performance of domestic corporations involved in pharmaceuticals, medical devices, and overseas businesses that generate revenue. On the other hand, it is increasing the burden of expenses related to importing pharmaceutical raw materials and promoting global clinical trials. An analysis suggested that Trump's tariff policy, which has drawn attention from the global industry, will have a limited impact on domestic pharmaceuticals and biotechnology corporations.
According to the foreign exchange market on the 18th, the won-dollar exchange rate has risen above the 1400 won mark last month. On this day, the won-dollar exchange rate opened at 1439 won, which is 0.1 won higher than the previous trading day's closing price (based on 3:30 p.m. weekly trading).
Corporations with a greater proportion of exports than imports can benefit from the strong dollar. This is because they can realize foreign exchange gains due to the rise in the exchange rate. In simple terms, when the won-dollar exchange rate is 1000 won and they received 100 million won, it becomes 140 million won now that the exchange rate is above 1400 won, which can contribute to their performance.
Samsung Biologics, Samsung Bioepis, SK Biopharmaceuticals, Celltrion, Huons, Samjin Pharmaceutical, and Daewon Pharmaceutical are listed as corporations that can benefit from exchange gains in their export performance. Seo Jung-jin, chairman of Celltrion Group, stated at a press conference the day before, 'Celltrion's sales are settled in dollars or euros,' and added, 'Of course, there are imports, but the scale of imports is not large, so there is no pressure from the rise in the won-dollar exchange rate.'
GC Green Cross is directly selling the immunoglobulin blood product "Aliglo" in the United States. Yuhan Corporation is reportedly receiving around 10-15% in royalties from the sales of the anticancer drug "Lecraza," which has been licensed to Janssen, a subsidiary of Johnson & Johnson in the U.S., and if the strong dollar continues, they can also enjoy foreign exchange gains.
Last year, Samsung Biologics, which had the largest export performance among domestic pharmaceuticals and biotechnology corporations, is expected to surpass 4 trillion won in annual sales for the first time this year. Exports to the U.S. increased by 13.7% year-on-year to 971.1 billion won, while exports to Europe grew by 31.5% year-on-year to 2.3538 trillion won. Huons, which exports local anesthetics containing lidocaine and saline injection products, recorded an annual export figure of 2.62 billion won in the North American market, which is a 113% increase from the previous year.
Osstem Implant operates a total of 36 local subsidiaries in about 30 countries, including the U.S., China, and Japan, selling and marketing implant products directly. Aesthetic medical device corporation Classys is also exporting high-intensity focused ultrasound (HIFU) equipment "ShrinK" and radio frequency (RF) device "Volumer" to overseas countries.
On the other hand, for pharmaceutical importers and corporations that need to promote global clinical trials, the weak won is a burden. A representative of a domestic biotechnology company, who requested anonymity, noted, 'For new drug development companies that are conducting clinical trials in the U.S. or need to promote them, the cost burden has increased due to the exchange rate.'
U.S. tariff policies are also a major variable. President-elect Donald Trump said at a press conference in Florida on the 16th (local time), 'Tariffs will make America wealthy.' He had previously promised to adjust tariffs and impose trade restrictions to encourage domestic production of essential medicines in the U.S. China is the largest producer of essential medicines in the U.S.
Domestic pharmaceuticals and biotechnology industries believe that the impact of Trump's tariffs will be limited. Currently, the majority of pharmaceuticals are classified as essentials under the Korea-United States Free Trade Agreement (FTA) and are exported to the U.S. duty-free.
Seo Jung-jin, chairman of Celltrion, stated, 'Celltrion supplies products as contract manufacturing organizations (CMO) in the U.S., so we do not see tariffs as a constraint on our business,' adding that 'we have taken all possible preemptive measures for any other potential issues.'
A representative from Huons remarked, 'The lidocaine injection, which is our main export product, is a basic medicine that is experiencing a shortage in the U.S., and there are only 1-2 production companies in the U.S.,' and explained that, 'Even if tariffs rise, since most lidocaine products in the U.S. market are imports, competitors will also face rising tariffs.'
Seo Geun-hee, a senior researcher at Samsung Securities, predicted, 'If the U.S. implements pharmaceutical tariff policies, it will likely push for domestic production rather than overseas for essential medicines such as ibuprofen and hydrocortisone.' He noted that since the pharmaceuticals that Korean corporations mainly produce focus on long-term chronic disease treatments, the impact on the domestic industry will be limited if tariff policies targeting essential medicines are implemented in the U.S.