US grants zero-tariff treatment to qualifying Korean medicines

South Korea joins 19 eligible jurisdictions

The United States has made selected South Korean medicines eligible for zero-tariff entry, potentially reducing costs and regulatory uncertainty for Korean pharmaceutical and biotechnology companies supplying the US market. Opinion News reported, citing the Korea Biotechnology Industry Organization, that the US Commerce Department’s Bureau of Industry and Security defined the qualifying products under Presidential Proclamation 11020 and published a process for companies to request duty-free approval based on urgent US health needs.

The revised Harmonized Tariff Schedule of the United States takes effect on the 29th. South Korea is among 19 eligible jurisdictions, alongside the European Union, Japan, the United Kingdom, Switzerland, India and Taiwan. Eligibility does not automatically exempt every shipment: the Commerce Department must determine that a medicine serves an urgent US health requirement.

The covered categories include medicines whose approved indications are all designated for rare diseases, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody-drug conjugates, products used against chemical, biological, radiological and nuclear threats, and veterinary medicines. The relief extends to finished medicines, active pharmaceutical ingredients and key starting materials required to produce APIs. Inactive ingredients and excipients are excluded, while qualifying products and materials used solely for clinical trials, research and development or other non-commercial purposes can receive the zero rate.

Exemption limits exposure to broader US tariffs

The United States had previously decided to impose a 100% tariff in principle on certain patented medicines and related ingredients, citing the national-security risk created by heavy dependence on foreign supplies. The measure applied to companies listed in an annex from July 31, with other companies due to become subject on the 29th. Generic drugs and biosimilars were excluded from the pharmaceutical tariffs.

Separate country trade arrangements also remain relevant. Patented medicines from South Korea are reportedly subject to a 15% tariff ceiling under a trade agreement. Inclusion in the eligible-jurisdiction system means that qualifying products within that group may now avoid the tariff entirely. This should lower uncertainty for Korean exports and for materials sent to the United States for clinical trials.

The decision arrives during rapid growth in South Korea’s pharmaceutical sector. Ministry of Food and Drug Safety figures cited by Opinion News show that pharmaceutical production reached a record KRW 33.8466 trillion last year. Exports surpassed $10 billion for the first time at $10.438 billion, while the trade surplus reached a record $1.50581 billion.

Biologics and US capacity shape the competitive impact

Biopharmaceutical exports totaled $7.64 billion last year, about 73% of all pharmaceutical exports. They reached a first-half record of $4.5 billion this year, approximately 15% higher than a year earlier, supported by rising biosimilar demand and contract development and manufacturing organization orders. South Korean products accounted for five of the 18 biosimilars approved by the US Food and Drug Administration last year, the largest number from any country.

South Korea’s leading biologics companies are also building US production capacity. Celltrion completed its approximately KRW 460 billion acquisition of Eli Lilly’s Branchburg, New Jersey, facility on December 31 and began full operations in January. Including initial operating costs and future expansion, investment exceeds KRW 1.4 trillion. Samsung Biologics acquired GSK’s Rockville, Maryland, facility for approximately KRW 414.7 billion. The 60,000-liter plant lifted its global capacity from 785,000 liters to 845,000 liters.

The tariff exemption therefore complements, rather than replaces, localization. Zero-duty treatment can improve the economics of eligible Korean-made therapies and clinical supplies, while US plants provide production proximity and protection against policy changes affecting non-exempt products. The immediate benefits are likely to be concentrated in specialized categories such as plasma therapies, cell and gene treatments and antibody-drug conjugates, rather than across the full Korean pharmaceutical portfolio.