US President Donald Trump announced Tuesday that his administration will soon impose tariffs on imported pharmaceuticals, which had previously been exempt from major "reciprocal" tariff measures, raising alarm across Korea’s pharmaceuticals and biotech industries.
According to multiple foreign news outlets, Trump made the statement during a dinner hosted by the National Republican Congressional Committee in Washington. There, he suggested that pharmaceuticals companies would likely "relocate operations" to the US, given the size and importance of the American market.
The US is Korea’s largest export destination for pharmaceutical products, making the industry particularly sensitive to such policy changes.
Data from the Korea Customs Service shows that Korean pharmaceutical exports to the US reached $1.51 billion last year, a 50 percent increase from $1 billion the year before. The US accounted for 18 percent of Korea’s total pharmaceutical exports during this period.
Industry experts believe any new pharmaceutical tariffs are likely to be phased in gradually rather than implemented abruptly.
“While being a massive market, the US is also heavily reliant on foreign pharmaceuticals, which limits its ability to impose aggressive tariffs overnight,” a senior official in Korea's biopharmaceuticals industry said.
"Some Korean firms are eagerly collaborating with local contract manufacturing organizations (CMOs) or considering building local production facilities. But since this is a large-scale initiative that could take at least five years, preparations now may not be quick enough to respond to the Trump administration’s moves.”
Lee Myung-seon, an analyst at DB Financial Investment, also suggested in a recent report that the impact on Korean firms might be limited due to existing export arrangements.
For instance, major botulinum toxin exporters like Daewoong Pharmaceutical and Hugel reportedly do not bear tariff liabilities under their contracts. As a result, their products are distributed through US partner firms, which would likely absorb any new tariffs.
Meanwhile, several Korean biopharmaceutical companies are taking proactive steps to mitigate potential risks associated with sudden US policy shifts.
SK Biopharmaceuticals has already secured US FDA-approved CMO facilities and is exploring additional production options. Its flagship product, cenobamate, is manufactured in Korea as an active pharmaceutical ingredient, but processed into bulk tablets and packaged in Canada before being exported to the US, enabling flexible adaptation to regulatory changes.
Other companies are stockpiling inventory to cushion short-term tariff impacts. Celltrion has built up enough local inventory to meet US demand without requiring additional imports for an extended period.
The company is also planning to acquire a manufacturing facility in the US capable of producing both active pharmaceutical ingredients and finished drugs. This aligns with its strategy to focus on API exports — which typically face lower tariffs — while shifting finished drug production to local facilities in the US.
The industry assesses that imposing tariffs on low-cost pharmaceuticals could significantly burden the US health care system, potentially drawing opposition from American hospitals and pharmaceutical associations. During Trump’s first term, generics and biosimilars were exempt from tariff measures, and many expect a similar approach this time around.
Beyond tariffs, administrative uncertainty poses another challenge for the industry. Reports indicate that significant layoffs at the FDA under Trump’s administration could disrupt the drug approval process. While Trump has pledged to accelerate new drug approvals, instability at the FDA adds an element of risk for drug developers.
“Korean firms that had originally been focusing on CMOs for profit are enhancing their drug development capabilities and exploring opportunities for open innovation,” said an industry insider. “However, administrative instability at the FDA means that drug development still carries inherent risks.”
hykim@heraldcorp.com
