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With the Biden administration pushing for a tariff increase on Chinese medical devices such as syringes, needles, rubber gloves, and face masks, South Korean companies, which have struggled to secure market share due to low-cost competition, are expected to benefit from the situation. However, the pharmaceutical and biotech industries remain nervous, warning that the escalating trade war could also have negative impacts.
According to industry sources on the 22nd, President Joe Biden announced on the 17th of this month (local time) that he would raise the tariff rates on Chinese-made syringes, needles, rubber gloves, and face masks. The tariff on syringes and needles will increase from 0% to 50% by the end of this year, and the tariff on certain respirators and face masks will rise from 0-7.5% to 25%. The tariff on medical and surgical rubber gloves will also significantly increase from 7.5% to 25% by 2026.
South Korean medical device manufacturers are expecting to benefit from these tariff increases by the U.S. HLB Group received FDA approval last year to sell Sofjec, a syringe produced by its subsidiary Hwajin Medical. An HLB Group official said, “We had difficulties securing a market share in the U.S. due to the onslaught of low-cost Chinese syringes,” and added, “We expect to benefit as the tariff on Chinese syringes significantly increases.”
In addition to this, companies like Shina Corporation and Poonglim Pharmatech are exporting syringes to the U.S. The export volume of Korean-made syringes in 2021 was $62 million, a significant portion of which is known to be exported to the U.S. after COVID-19. The FDA recently banned imports from two Chinese plastic syringe manufacturers, Zhejiang Longde Pharmaceutical and Shanghai Kindly Enterprise, citing quality issues.
However, it is predicted that this measure will not significantly impact the pharmaceutical and biotech industries beyond medical devices. A pharmaceutical and biotech industry insider said, “It’s not a measure that will have a significant impact on the export of Korean-made drugs as it’s limited to specific areas,” and added, “As the trade dispute is prolonged, we don’t know what measures such as participation in tariff increases will come out, so we need to watch the situation in the long term.”
Meanwhile, as part of its trade regulation movement against China, the U.S. passed the Biosecure Act in the Committee on Oversight and Accountability of the House of Representatives on the 15th of this month. The legislation aims to restrict transactions with Chinese biotech companies identified as concerns by the U.S. Congress, including Beijing Genomics Institute (BGI), WuXi AppTec, and MGI. In the industry, it is expected that domestic Contract Development and Manufacturing Organizations (CDMOs) like Samsung Biologics will benefit from this legislation.
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