Drug exporters concerned over Trump’s 200% tariff plan

Uncertainty looms over Bangladesh's pharmaceutical exports to the US market, as President Donald Trump plans to impose tariffs of up to 200 percent.

Industry insiders said several companies are preparing to export to the US market and have built up capacity with world-class facilities, but the tariff plan, if implemented, may prevent them from commencing exports.

Trump on Tuesday announced plans to impose tariffs of up to 200 percent on pharmaceutical imports, although he signalled a grace period of about one and a half years before the policy takes effect, reports Reuters.

"Bangladesh's pharmaceutical industry, while still small on a global scale, has been steadily expanding its footprint," said Zahangir Alam, chief financial officer of Square Pharmaceuticals.

Bangladeshi pharmaceutical companies could face tougher hurdles in accessing the US market due to such trade barriers, says an insider

"However, we are observing significant changes that could impact our competitiveness," he told The Daily Star.

Square Pharmaceuticals currently exports medications worth around $4 million to $5 million annually to select US markets, Alam said.

Although some Bangladeshi firms have received US Food and Drug Administration (USFDA) approval, the country currently lacks the capacity to lower pharmaceutical prices further to remain competitive in the US market under such a high duty regime, he said.

Arefin Ahmed, executive director (marketing) of Incepta Pharmaceuticals Ltd, said Bangladeshi exporters could face serious setbacks if the US enforces the steep import duty on medicine.

While the tariff would affect all exporting nations, Ahmed believes Bangladeshi firms may be particularly vulnerable because they rely on competitive pricing to gain entry into regulated markets like the US.

"Companies have invested heavily to obtain USFDA approvals, but a 200 percent tariff threatens our cost advantage," he said.

Mohibuz Zaman, managing director and CEO of ACI HealthCare Ltd, said any new tariff imposed by the US government on pharmaceutical imports would significantly raise health insurance costs for American insurers, creating a major challenge for the industry.

At the same time, Bangladeshi pharmaceutical companies could face tougher hurdles in accessing the US market due to such trade barriers, he added.

Citing data from the Export Promotion Bureau, he said Bangladesh exported around $30 million worth of pharmaceuticals to the US last fiscal year, which accounts for only 14 percent of the country's total annual drug exports.

"Although the figure is not very significant, it is a matter of the industry's image," he said.

However, Abdul Muktadir, president of the Bangladesh Association of Pharmaceutical Industries (BAPI), said Bangladeshi drugmakers see both opportunities and risks emerging from the US government's tariff decision.

"There's potential for Bangladeshi firms to gain market share due to this new tariff, but we also risk losing access because we'll face strong competition from global players," he told The Daily Star.

Muktadir noted that many local manufacturers have long prepared to expand exports but may now be forced to explore alternatives such as contract manufacturing or joint ventures to establish production bases in the US.

"Indian and Chinese companies have already acquired stakes in US firms for local production. Bangladeshi companies must follow suit to stay competitive," he said.

Although Bangladesh has invested heavily in research and development, the proposed tariff could delay market entry by one to one and a half years, potentially inflicting significant financial losses, cautioned Muktadir.

"In the meantime, we're unable to export, which is a serious concern," he added.

To mitigate the impact, Muktadir proposed that the government allow pharmaceutical exporters to each invest up to $10 million in the US market.