KUALA LUMPUR: An executive order signed by US President Donald Trump is not seen to have much impact on the Malaysian pharmaceutical sector, though there could be increased scrutiny on drug costs and the local supply chain.
In his signed order, Trump had directed drugmakers in the United States to lower the prices of their medicines in the country to align with what other countries pay – by some 30% to 80% – noting prices in some countries were lower than what was sold in the United States.
Duopharma Biotech Bhd
’s group managing director Leonard Ariff Abdul Shatar said most companies in Malaysia manufacture for the country’s own domestic usage.
“Generally speaking, the majority of Malaysian-owned pharmaceutical manufacturers do not export to the United States so the impact will be marginal, if at all.
“However some multinational manufacturers based in Malaysia, for example, Biocon and Novugen may have some impact as they are exporting to the United States,” Leonard told StarBiz.
“However, it is premature at the moment to quantify impact until details of the new US policy are clarified,” he noted.
It could also mean that other countries would need to cover any shortfall in the profit and loss statements of such companies that are based in the United States.
The executive order signed by Trump aims to reduce high prescription drug prices in North America and may have lacked clearer details for now.
But the most favoured nation clause that guides the thinking at the World Trade Organisation had been cited by Trump, who was also quoted as saying, “Whoever is paying the lowest price, that’s the price that we’re going to get.”
The US market appears to be ignoring this as a threat to overall industry growth for now, as share prices of pharmaceuticals listed there had recouped their earlier losses, and optimism over an eventual US-China trade deal clearly boosted sentiment instead.
Trump also claimed pharmaceutical companies in the US charge higher prices citing research and development (R&D) costs.
Apart from R&D, pharmaceutical companies reportedly also spend high amounts of costs for political lobbying in the United States.
The effects of this order to the entire international drug supply chain is yet to be ascertained at this stage and this was initially proposed during Trump’s first term in 2020.
But this was reportedly rescinded by former US President Joe Biden following various legal challenges from the pharmaceutical industry then.
The main drugmakers that are listed on the Bursa Malaysia include Pharmaniaga Bhd, Duopharma Biotech Bhd, Kotra Industries Bhd and YSP South-East Asia Holding Bhd.
A strong quarter is expected for local drugmakers following the recently reported growth that was seen in Pharmaniaga recently.
Last week, Pharmaniaga reported a strong start to the financial year with profit after tax at RM30.2mil for its first quarter ended March 31, 2025, which is a year-on-year increase of 15.5% from the corresponding quarter last year.
Pharmaniaga’s revenues for the quarter also increased by 9.4% to RM1.1bil, supported by the manufacturing division that contributes 65% to the group’s profit.
Meanwhile, CGS International Research said it anticipates Duopharma could see further margin improvements this year if current macro trends persist.
“The ringgit continues to strengthen against US dollar while freight rates and active pharmaceutical ingredients prices remain on a downtrend,” it said.
