Samsung Biologics, Celltrion, and other major corporations in the domestic pharmaceutical and biopharmaceutical sectors plummeted in value on the 7th. Despite pharmaceuticals being excluded from the tariff targets set by the Trump administration in the United States, they could not evade the downward trend in global stock markets. This is because there is uncertainty stemming from the possibility of additional tariff attacks by the Trump administration at any time, as well as delays in approvals and worsened funding.
U.S. President Donald Trump announced on the 2nd (local time) a plan to impose a basic 10% tariff on all imports and to add punitive tariffs on over 60 trading nations. Pharmaceuticals were excluded from the items announced for mutual tariff imposition that day, but experts believe that additional tariffs could still be imposed on pharmaceuticals at any time.
◇Pharmaceuticals may face separate tariffs…Concerns about funding pressure
According to the White House press pool, on the 3rd, President Trump told reporters aboard the presidential plane en route to Miami, Florida, "We are currently looking at the pharmaceutical sector, and this is a category separate from (the existing tariffs). It will be announced in the near future and is currently under review."
It is not easy for the U.S. to raise tariffs on pharmaceuticals, as imposing tariffs on essential pharmaceuticals could lead to harm to its own citizens. If tariffs are applied to imported pharmaceuticals, manufacturing costs could soar, resulting in higher prices for medications, which could adversely affect patients. For this reason, pharmaceuticals have been excluded from the trade war for a long time.
Nonetheless, there are forecasts that the Trump administration could categorize pharmaceuticals in more detail for tariff purposes. In this case, depending on the range of pharmaceuticals targeted and the tariff rates, domestic bio corporations could suffer losses. Even if there are no changes in the tariff rates imposed on pharmaceuticals, the overarching tariff policies of the United States could trigger a "butterfly effect" that complicates funding for Korean bio corporations.
Huh Hyemin, a researcher at Kiwoom Securities, noted, "If inflation continues due to the overall impact of tariff policies, the high-interest-rate trend could persist. This ultimately may prolong the difficult funding situation for biotech companies."
The restructuring policies of the Trump administration could also adversely affect domestic pharmaceutical and biopharmaceutical corporations that have entered or are seeking to enter the U.S. market. The Trump administration has decided to lay off about 10,000 employees from the Department of Health and Human Services. Restructuring targets include the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), and the National Institutes of Health (NIH). Huh expressed concern that "the FDA's new drug approval gateway could close due to the restructuring impact of the Trump administration." Collaborative research and development (R&D) for new drugs may also be stifled.
◇Support for diplomacy and trade is urgent…Absence of leadership is a setback
Despite these circumstances, the government and the National Assembly find it difficult to respond properly to the Trump administration. After the impeachment decision of former President Yoon Suk-yeol, the political arena is shifting to a "preliminary election" mode, making it seem likely that the National Assembly will effectively suspend the review of bills and policy discussions.
A member of the National Assembly's Health and Welfare Committee said, "With the confirmation of a preliminary election, there is a strong possibility that the review of welfare committee-related bills will be delayed." Originally, the National Assembly was scheduled to hold subcommittee and full meetings in April, but this could mean that subsequent schedules and procedures may be postponed.
The industrial sector is urging support and nurturing policies for the pharmaceutical and biopharmaceutical industries, along with leadership in the fields of diplomacy and trade. Lee Seung-kyu, vice president of the Korea Bio Association, stated, "Currently, while mutual tariffs on pharmaceuticals have been exempted, there are still separate tariff measures pending. This tariff issue, which remains chaotic like in other countries, needs to be resolved on a sector-by-sector and government-wide basis."
The vice president emphasized the need to rapidly advance policies for nurturing the bio industry. He noted, "Given that the U.S. has no choice but to adopt price reduction policies to decrease medical costs, opportunities for the biosimilar (biopharmaceutical generic drugs) and generic (synthetic pharmaceutical generics) business could grow larger. Since Korean corporations have competitive advantages, to seize these opportunities well, government-level support in diplomacy and trade is essential."