US President announces 100% levy on branded, patented pharmaceutical products starting Oct. 1

President Donald Trump speaks to reporters at the White House in Washington on Thursday. (UPI-Yonhap)
President Donald Trump speaks to reporters at the White House in Washington on Thursday. (UPI-Yonhap)

US President Donald Trump’s abrupt announcement of a 100 percent tariff on pharmaceuticals on Friday has put Korean drugmakers on edge.

According to a post by Trump on his Truth Social platform, the US will impose a 100 percent tariff on any branded or patented pharmaceutical product starting Oct. 1, unless the drugmaker is building a pharmaceutical manufacturing plant in the US.

He emphasized that “is building” will be defined as “breaking ground” and/or “under construction,” adding that there will be no tariff on pharmaceutical products if construction has begun.

Although the tariff rate was lower than what Trump indicated in July when he said the US would impose a 200 percent tariff on pharmaceutical products with a grace period of 18 months, the remark sent shockwaves through the Korean pharmaceutical industry, with some companies better prepared to absorb the blow while others were closely monitoring the policy's development.

Celltrion, which announced a $330 million acquisition of Eli Lilly’s biopharmaceutical manufacturing plant in New Jersey on Tuesday, remained confident as the company had prepared short-, mid- and long-term countermeasures to the US tariff policies.

“We are going to have to keep monitoring the issue until specific policies are revealed, but right now we have two years’ worth of inventory stocked in the US, so we are not concerned about tariffs for the next two years,” said a Celltrion official.

“After that, we expect to begin supplying locally manufactured products to the US market, so there will be no tariff risk. We already started working on procedures for the validation process and plan to quickly expand the plant to meet demand from (contract manufacturing organizations), which is projected to sharply increase.”

SK Biopharmaceuticals echoed a similar stance as the company has already been preparing for US production by obtaining approval from the Food and Drug Administration for a local plant.

“In the long term, our production in the US isn't too large, so such uncertainty doesn't put too much of a burden on us, given SK Group’s existing infrastructure.”

Lotte Biologics, which completed a $160 million takeover of Bristol Myers Squibb’s drug production plant in Syracuse in 2023, also said the tariff announcement is unlikely to impose a risk as it operates a US plant at the former BMS-owned site.

Korean pharmaceutical companies without a US production facility, such as Samsung Biologics and Daewoong Pharmaceutical, said for now they were keeping close tabs on Trump’s latest tariff comments.

The Korea Biotechnology Industry Organization said it remains unclear how Trump’s 100 percent tariff on any branded or patented pharmaceutical product will be applied to trade partners such as Europe and Japan that have already agreed to a 15 percent tariff on pharmaceuticals. It added that the US government is expected to unveil the specifics of the 100 percent tariff on pharmaceutical products before Oct. 1.

According to the Korea Bio-Economy Research Center, Korea exported $3.9 billion worth of pharmaceutical products to the US last year, up $1.4 billion from 2023.


hwkan@heraldcorp.com