Donald Trump, the president of the United States, has announced a tariff on pharmaceuticals, putting the domestic pharmaceutical and bio industry on alert. As the largest pharmaceutical market in the world and the biggest export destination for domestic corporations, the implementation of tariffs could have a significant impact on domestic corporations.
According to industry sources on the 10th, domestic pharmaceutical and bio corporations are closely monitoring the tariff situation in the United States and preparing countermeasures. The United States is the largest export market for domestic pharmaceuticals. Last year, exports of domestically produced pharmaceuticals to the U.S. totaled $1.506364 billion (about 2.2 trillion won), an increase of about 50% from the previous year. The U.S. export ratio is a dominant 18%, ranking first.
On this day, after President Trump announced a plan to impose a 25% tariff on steel and aluminum, the domestic industry became increasingly busy. In a press briefing on the 31st of last month (local time), President Trump mentioned the plans for tariffs on steel and also addressed pharmaceuticals, stating that "the way to bring the pharmaceutical industry back to the U.S. is to erect tariff barriers," and added, "I will impose tariffs on all forms of medicines, including pharmaceuticals and drugs."
If tariffs on pharmaceuticals are implemented, domestic corporations that have entered the U.S. market are expected to be inevitably affected. Production expenses may increase, and there could be disruptions in the supply chain.
Celltrion and Samsung Bioepis, which export domestically produced biosimilars (copy drugs of bio-pharmaceuticals) to the United States, are prime examples. So far, Celltrion has received FDA approval for 5 types of biosimilars, while Samsung Bioepis has 8 types. Their main competitive advantages include lower prices compared to original medications, securing trust from healthcare providers and patients, production and supply stability, and reimbursement listings in key markets such as the U.S. and Europe.
Celltrion sells autoimmune disease biosimilars Steqeyma and Yuflyma, as well as the cancer treatment Vegzelma, directly to the U.S. market through its wholly-owned subsidiary, Celltrion USA. By selling directly, bypassing intermediaries, it can reduce wholesale prices (WAC) and is expanding its direct sales systems. However, if tariffs are applied, its price competitiveness may weaken compared to existing levels.
In response, Celltrion swiftly prepared medium- to long-term countermeasures. To ensure stable supply of products currently sold in the U.S., it has secured inventory up to the third quarter of this year. In case of tariff application, it plans to focus on exporting raw pharmaceuticals, which impose less tariff burden than finished goods, and also presented alternatives to collaborate with local U.S. manufacturers to produce finished products. It is also considering options to acquire or establish local production factories in the U.S.
Samsung Bioepis has not yet announced specific plans and is currently taking a wait-and-see approach. The company is engaged in distribution, sales, and marketing in collaboration with its U.S. partner firms, Oganon, Sandoz, and Teva, which have local sales networks.
Daewoong Pharmaceutical and HUGEL, which are exporting botulinum toxin products to the U.S., are also under threat. The domestic botulinum products developed by these corporations are sold at about 30% lower than AbbVie's botulinum products, and there are concerns that the imposition of tariffs could diminish their main competitive advantage of lower prices.
SK Biopharm, which exports the epilepsy treatment drug Cenobamate, is also facing significant concern. The company produces Cenobamate at a Canadian contract development and manufacturing organization (CMO) and exports it to the U.S. With U.S. sales consistently increasing, if tariffs are imposed on Canada, it is evaluated that alternatives, including changing CMO partners, will be necessary.
Huh Hye-min, a researcher at Kiwoom Securities, noted that "domestic bio corporations seem to be preparing plans to adjust prices upward for exports to the U.S. in anticipation of tariffs," but he also stated, "As no tariff imposition plan has been announced yet, they seem reluctant to disclose precise direction."
However, there are also opinions suggesting that the United States may take a cautious stance on imposing tariffs on pharmaceuticals, unlike with semiconductors and steel. The American Hospital Association (AHA), which represents U.S. hospitals and medical systems, recently sent a letter to Trump, urging the exclusion of tariffs on pharmaceuticals due to concerns about drug shortages and rising prices.
The Biotechnology Innovation Organization (BIO) also issued a statement on the 3rd, stating, "The bioindustry must recognize the fact that it relies on diverse and global supply chains," and emphasized that "tariff policies must consider the impacts on patients and consumers."
Researcher Huh Hye-min mentioned, "The most likely option appears to be imposing tariffs on essential medicines such as antipyretics and steroids like hydrocortisone to encourage domestic production." He added, "If drug prices rise, inflation or harm to the citizens will follow, but it remains to be seen if tariffs will actually be imposed."
Hwang Joo-ri, head of the External Cooperation Division of the Korea Bio Association, stated, "Since nothing has been officially decided yet, consensus in the industry is that there will be no significant immediate impact." He continued, "In addition to tariff issues, the fact that the Biological Security Act has not been finalized means we must continue to monitor what U.S. unilateral policies will emerge."