US President Donald Trump. [AP]
US President Donald Trump. [AP]

The Trump administration has formally announced plans to impose tariffs of up to 200 percent on imported generic drugs, sending another wave of trade uncertainty through the global pharmaceutical and biotech market.

South Korea's pharmaceutical and biotech industry believes the immediate damage will be limited. Korean exports of generic drugs to the United States are minimal, and major domestic biotech companies have already secured production facilities on American soil.

Still, the industry is watching closely for details in forthcoming US government guidelines, as the measures could potentially expand beyond generics to biosimilars, improved new drugs — reformulated or modified versions of approved medicines designed to enhance convenience and safety — and novel drugs.

Trump announced Tuesday via social media that the United States would impose a 100 percent tariff on imported generic drugs starting Aug. 1, 2028, rising to 200 percent from Aug. 1, 2029. The plan preserves the current tariff-free status for two years to encourage companies to relocate production to the United States, after which those that fail to comply would face steep levies as part of a broader effort to rebuild a domestically centered supply chain.

"This is to bring generic drug manufacturing back to the United States," Trump said. "Companies that do not build production facilities and equipment within the designated period will face sanctions." He added that existing policies on patented, brand-name and innovative drugs "will continue to be successfully maintained," and noted that "unprecedented levels of pharmaceutical facility construction are underway across the country."

The generics Trump referenced are copies of off-patent synthetic drugs manufactured to be identical in composition, formulation and efficacy to the original, and they account for more than 90 percent of prescription drugs dispensed in the United States. India and China in effect dominate the US market for imported finished generic drugs and active pharmaceutical ingredients — India as the leading supplier of finished generics, China as a key node in the supply chain for APIs and drug intermediates. Analysts widely expect the high tariffs to fall primarily on Indian and Chinese pharmaceutical companies.

Domestic traditional pharmaceutical companies, which export relatively little in synthetic generics to the US market, are largely insulated in the short term. "Not many Korean companies export generics to the United States, and the volumes are small, so no major fallout or issues are expected immediately," an industry official said.

Leading Korean biotech firms have also reduced their exposure by securing US production bases ahead of time. Samsung Biologics, Celltrion and SK Biopharm have all established their own manufacturing facilities in the United States in preparation for shifts in the trade environment. "We already have local production facilities in place, so we are fully equipped to respond swiftly to any regulatory changes that may come," a Celltrion official said.

The deeper concern in the industry is the potential for the policy to expand. Companies are most worried that the tariff measures, which start with generics, could eventually spread to biosimilars, improved new drugs and novel drugs — the core export products of Korean firms. When the Trump administration announced tariff measures on patented drugs in April, it said it would review whether to apply tariffs to generics and biosimilars one year later. The latest announcement laid out a tariff schedule only for generics, leaving the inclusion of biosimilars and APIs unspecified.

"There is a persistent anxiety that while it starts with generics, the next step could be an expansion to biosimilars or improved new drugs," another industry official said. "The key question is whether the scope will widen to cover biologics, and since nothing is certain yet, we need to keep a close watch on the situation for now."


silverpaper@heraldcorp.com