Celltrion Confident Amid Trump’s Drug Pricing Executive Order
SEOUL, May 15 (Yonhap) — South Korea’s renowned biopharmaceutical giant, Celltrion Inc., has expressed optimism regarding its business outlook in light of U.S. President Donald Trump’s recent executive order aimed at lowering prescription drug prices. This order, designed to align U.S. prices with those in other developed nations, has raised questions about its impact on the pharmaceutical landscape.
Understanding Trump’s Drug Pricing Initiative
Trump’s initiative is primarily focused on tackling the intermediaries—such as pharmacy benefit managers (PBMs) and private insurers—that contribute to inflated costs for consumers in the U.S. According to Celltrion’s Chairman Seo Jung-jin, the elevated prices in the U.S. are not solely a result of pharmaceutical companies’ pricing structures but stem from complications within the distribution process.
"High U.S. drug prices are not due to pharmaceutical companies, but rather the result of issues in the middle distribution process," Seo stated at an online press conference.
The Role of Intermediaries in Drug Pricing
Under the existing U.S. PBM system, original biologic drugs—like the ones manufactured by Celltrion—are first listed on formularies, with a few biosimilars added subsequently. Unfortunately, biosimilars often mirror the pricing of original drugs due to rebate issues related to intermediaries.
Seo elaborated, "If the intermediary distribution structure that includes PBMs is overhauled, biosimilar manufacturers would be able to negotiate drug prices directly with the government instead of going through intermediaries." This shift could create a wealth of opportunities for companies like Celltrion, allowing for more competitive pricing.
Minimal Expected Impact on Celltrion’s Operations
Despite the shift in drug pricing strategy, Seo remains confident that Celltrion’s business operations will largely remain unchanged. The company already provides its biosimilars at substantially discounted prices compared to original drugs in the U.S. market.
Additionally, regarding the planned import tariffs on pharmaceuticals, Seo highlighted that Celltrion’s flagship biosimilars—Remsima, Herzuma, and Truxima—are exempt from these tariffs. The company, which distributes its products through Pfizer in the U.S., has adequate inventory slated to sustain the market for up to 21 months.
Future Projections and Manufacturing Plans
Looking forward, Celltrion is considering the establishment of a manufacturing facility in the U.S. by the end of this year. "We have already completed studies on 48 potential sites in eight U.S. states for the project," Seo noted, indicating the company’s commitment to expanding its footprint in the U.S. market.
Seo forecasts that Celltrion will achieve sales between 4.6 trillion won (approximately US $3.29 billion) to 4.7 trillion won this year, a noticeable increase from 3.56 trillion won last year. This optimistic outlook comes as Celltrion continues to broaden its global biosimilar portfolio, growing its lineup of approved products from six to eleven.
Ambitious Goals for Future Growth
Celltrion aims to introduce 23 biosimilars by 2030 and 40 by 2038, while also planning to initiate clinical trials for 13 original drugs by 2035. Currently, the firm markets its only original drug, Zymfentra, in the U.S. as a treatment for autoimmune disorders.
The global market for Celltrion’s planned biosimilars is anticipated to nearly double, climbing from 138 trillion won this year to 261 trillion won by 2030, reflecting the growing demand for affordable medication options.
Conclusion
In summary, while Trump’s executive order on drug pricing has placed significant attention on the pharmaceutical industry, Celltrion anticipates minimal disruptions to its business operations. The company’s forward-thinking strategies and resilience in adapting to changing market dynamics position it well for continued success in the global biosimilar arena.
For more information on the impact of drug pricing reforms and industry trends, visit Health Affairs.
