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Korean firms 'exploring options' as Trump's pharma tariffs loom

Published: 06 May. 2025, 18:02

U.S. President Donald Trump speaks with reporters as he signs executive orders and proclamations in the Oval Office of the White House on May 5, 2025, in Washington. [AP/YONHAP]

Tensions are mounting in Korea’s pharmaceutical and biotech industries after U.S. President Donald Trump said he would announce tariffs on drug imports within two weeks, fueling fears of a trade shake-up in a sector once seen as immune from tariff pressure.

At a White House signing ceremony on Monday for an executive order aimed at boosting domestic drug manufacturing, Trump said he would unveil a major announcement on drug pricing next week and criticized foreign countries for what he called “unfair” pricing practices.

“Other countries have treated us unfairly when it comes to drug pricing,” he said. “We’re going to make a big announcement next week.”

Reuters reported there were few concrete details on potential tariff rates or timing but warned that Trump's plan could deal a serious blow to the pharmaceutical industry, because the United States imports over $200 billion in prescription drugs annually.

Samsung Biologics' logo is pictured at the firm's offices in Incheon. [YONHAP]

Korean pharma on alert

Trump has repeatedly signaled his intention to impose tariffs on pharmaceuticals since taking office this year, prompting global drugmakers to prepare contingency plans.

Eli Lilly and Company, Merck, Johnson & Johnson, Novartis, Roche, AbbVie and Amgen have all announced investments to expand manufacturing capacity in the United States.

In Korea, the companies most at risk include new drug developers and contract development and manufacturing organizations (CDMO) that export heavily to the United States. Korean pharmaceutical exports to the United States totaled $3.98 billion last year, according to the Korea Biotechnology Industry Organization.

Samsung Biologics, a leading CDMO based in Songdo, Incheon, supplies 17 of the world’s top 20 pharmaceutical companies. The United States accounted for 25.8 percent of the company’s revenue last year, second to Europe’s 65.2 percent.

However, analysts say the tariff impact on Samsung Biologics could be limited, as most of its exports involve drug substances rather than finished products.

U.S. dollar banknote and medicine are seen in this illustration. [REUTERS/YONHAP]

Even if tariffs apply to active pharmaceutical ingredients, they account for less than 10 percent of the final drug price, Shinyoung Securities analyst Jung Yoo-kyung wrote a recent report.

“The impact on client profitability is minimal, and the chance of customers demanding price cuts is low,” Jung noted.

Many of the products Samsung makes are cancer or chronic disease treatments, not essential medicines, which may keep them off tariff lists.

A Samsung Biologics spokesperson said the company is closely monitoring the situation.

While the firm has considered building a U.S. manufacturing base, CEO John Rim said at the J.P. Morgan Healthcare Conference in January that expanding in Korea remains more efficient.

“We looked at around 10 facilities for acquisition in the United States, but many were outdated,” Rim said. “We’ll continue exploring options.”

Celltrion on March 13 said it released its Steqeyma biosimilar in the United States. [CELLTRION]

Korea readies action

Celltrion exports biosimilars, including Zymfentra and Remsima, to the United States and Europe. It announced in February that it had secured sufficient inventory in the United States to continue sales without additional imports for an extended period.

“In the short term, we will operate using the nine-month supply already shipped to the United States,” a Celltrion spokesperson said. “For the longer term, we plan to expand exports of drug substances and work with local partners for formulation and distribution.”

The company expects to finalize an investment decision for a U.S.-based facility within the first half of the year.

SK Biopharmaceuticals, which markets its epilepsy treatment Xcopri primarily in the United States, said it began planning years ago and has secured a six-month inventory of its drugs in U.S. Food and Drug Administration-approved facilities.

Korea’s Ministry of Health and Welfare, which recently launched a tariff support center for biohealth firms, reiterated its opposition to potential U.S. measures.

In a statement on Tuesday, the ministry said it had submitted a formal opinion to Washington on Sunday, emphasizing that bilateral pharmaceutical trade is a strategic partnership based on trust and does not threaten U.S. national security.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY HWANG SOO-YEON [[email protected]]