Local drugmakers see little gain from US tariff exemption

Bangladesh’s pharmaceutical industry may see some opportunities from the latest US tariff adjustment, but the immediate benefits are likely to be limited because the country does not currently manufacture many of the highly specialised medicines covered by the measure, industry leaders said.

The US announced a 100 percent ad valorem tariff, a charge levied on imports and defined in terms of a fixed percentage of value, on certain licensed pharmaceutical products and ingredients from September 29 under Section 232 of the Trade Expansion Act.

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The tariff came into effect on July 31 for companies listed in one annex to Donald Trump’s announcement and is scheduled to apply to other covered companies from September 29.

Bangladesh is among a group of eligible jurisdictions that includes Argentina, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, India, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the United Kingdom and Vietnam.

Under the tariff adjustment, certain pharmaceutical products and associated ingredients from eligible jurisdictions will face a zero ad valorem tariff.

The covered products include orphan drugs (a pharmaceutical agent developed specifically to treat, prevent, or diagnose rare orphan disease), nuclear medicines, plasma-derived therapies, fertility drugs, cell therapy products, gene therapy products and antibody-drug conjugates.

The list also includes medical countermeasures related to chemical, biological, radiological and nuclear threats, other specialty pharmaceutical products to be identified by US authorities, and pharmaceutical products for animal health, subject to specified conditions.

However, industry leaders said the tariff provision does not necessarily translate into immediate export gains for Bangladesh because local manufacturers have limited production of such specialised products.

Shawkat Haider, executive director of Beximco Pharmaceuticals Limited, said Bangladesh is unlikely to benefit from the tariff adjustment in areas where the country does not manufacture highly sophisticated drugs.

“Bangladesh will not get any significant benefit from the tariff adjustment because we do not manufacture this type of highly sophisticated medicine,” he said.

He said the country’s pharmaceutical industry is not yet capable of manufacturing such complex drugs at the required scale and to the necessary standards. Developing that capacity would also require substantial investment in technology, research and development, manufacturing facilities and regulatory compliance.

He noted that Bangladesh has a limited number of manufacturers of animal healthcare products, but the industry is not yet sufficiently advanced to meet the stringent requirements of the highly regulated US market.

According to Shawkat, entering the US pharmaceutical market is particularly challenging because Bangladeshi manufacturers face strong competition from established producers in countries such as India, South Korea and Japan.

Abdul Muktadir, chairman and managing director of Incepta Pharmaceuticals Ltd and president of the Bangladesh Association of Pharmaceutical Industries (BAPI), said Bangladesh currently does not export such drugs to the US, but the tariff adjustment could create new opportunities in the future.

“In my judgment, Bangladesh does not export such drugs to the USA, but it may open new opportunities in future,” he said.

However, he said the tariff adjustment could generally create some opportunities for Bangladesh’s pharmaceutical sector, but the potential benefits need to be examined carefully on a product-by-product basis.

“Generally speaking, yes, there could be some opportunities. But we have to dig deeper to identify the specific items and understand where Bangladesh can actually benefit,” he said.

The impact will depend on Bangladesh’s production capacity, quality and ability to meet US regulatory requirements, he added. “A product-level assessment will be needed to identify where export opportunities exist.”