Establishing a US production base, focusing on drug substance imports over drug product imports, and building up US inventory are all ways in which Celltrion could mitigate US pharmaceutical tariffs announced by US president Donald Trump, the Korean biosimilars specialist has indicated in response to investor concerns.
Acknowledging that “in a recent speech shortly after his inauguration, US President Donald Trump briefly mentioned that, along with semiconductors and steel, foreign-produced pharmaceuticals would also be subject to tariffs,” Celltrion said that “some of our shareholders have expressed concerns regarding this statement.”
In response, the firm set out a series of short-term, medium-term and longer-term measures that it could take to minimize the impact of any tariffs – although at the same time, Celltrion pointed out that “to date, president Trump has not presented specific policy proposals regarding drug tariffs, and the actual implementation is still uncertain, requiring further review and policy observation.”
Moreover, the firm observed, tariffs on pharmaceuticals “could lead to rising drug prices in the US, imposing significant burdens on consumers and the healthcare system. Therefore, it is unclear whether president Trump will actually enforce such measures. Notably, during his first term, president Trump consistently pushed for lower drug prices, and this tariff policy would directly contradict his previous stance on drug pricing.”
Nevertheless, Celltrion said it had “closely analyzed various scenarios regarding the possibility of tariffs and have already in place a system capable of responding immediately, regardless of how the policy is implemented.”
Inventory, Import Mix, And Local Manufacturing
In the short-term, Celltrion said that it currently had sufficient inventory of its products in the US to meet demand “until at least the third quarter of 2025, without the need for additional imports.” And for products that are expected to be depleted sooner, “we have the capability to produce finished pharmaceuticals from active pharmaceutical ingredients already imported to the US.”
However, in the company said that “if tariffs are sustained in the long term, we plan to focus on exporting drug substances, which are subject to lower tariffs, rather than finished drug products that face higher tariffs, and adjust our strategy to produce finished drug products at local manufacturing sites.” In connection with this, Celltrion said it was “already exploring cooperation with local companies that have sufficient manufacturing capacity to produce our products.”
Finally, in the long-term, the company said that it was evaluating potentially acquiring or establishing local US manufacturing facilities that would be capable of producing both finished drug products and drug substances. “This would help us create a stable supply chain that is less affected by political and social changes in the US, while also expanding our market share in the US,” the firm suggested.
Meanwhile, Celltrion also pointed to the likely wider impact of any such moves by the new US president. “If the Trump administration imposes tariffs,” the company suggested, “it is likely to increase the prices of consumer goods and raw materials in the US, leading to inflation.” And “if inflation worsens, there is a higher possibility that the US Federal Reserve will continue its tight monetary policy, which could result in sustained high exchange rates.”
“A high exchange rate environment can be beneficial for global export companies like us,” Celltrion underlined, “enhancing our competitiveness in the US market and improving profitability.”
“In conclusion,” Celltrion said, “we will continue to monitor the Trump administration’s tariff policy direction and are fully prepared to respond immediately if the policy is enacted. Moreover, in light of the changes in the global economic environment, we will leverage exchange rate fluctuations to maintain a stable profit structure and actively pursue long-term growth strategies. Additionally, we will strive to minimize supply and sales risks and maximize shareholder value through sustainable growth.”
