Thai Meds Sector Dodges Trump Tariff Bullet

Pharmaceuticals and medical devices spared as US imposes 36% import duty on other Thai goods; industry body urges caution over future trade talks

 

Thailand's pharmaceutical and medical device industries have been granted a reprieve from the hefty 36% import tariffs slapped on a range of Thai goods by the United States, following an announcement by President Donald Trump. 

 

The Federation of Thai Industries (FTI) convened an urgent meeting of export-oriented sectors to the US to assess the broader impact and strategise a response.

 

While the 9th April implementation of the tariffs sent ripples through numerous Thai industries, the essential nature of medicines and medical equipment has secured them a significant exemption. Furthermore, current export volumes of these products from Thailand to the US are relatively low.

 

Surachai Ruengsuksil, president of the FTI's Pharmaceuticals Industry group, confirmed to Krungthep Turakij that the retaliatory tariffs would not affect their exports, citing their essential status and the low volume currently shipped to the US.

 

He added that the impact on imports would hinge on the outcome of forthcoming trade negotiations between the two nations.

 

The FTI meeting concluded that the direct impact on Thailand's pharmaceuticals and medical devices sector was likely to be minimal due to the low export figures and the essential nature of these goods, leading to their exemption.

 

However, other industrial groups have been tasked with compiling detailed assessments to inform the government's negotiating position in future trade discussions.
  

Despite the tariff concerns in other sectors, Thailand's pharmaceutical industry continues on a strong growth path.

 

This expansion is fuelled by a rapidly aging population, increasing health consciousness among Thais, and a rising prevalence of non-communicable diseases (NCDs) requiring consistent access to quality medications.

 

Robust demand from international markets, particularly within Southeast Asia, further bolsters the sector's growth potential.

 

The Thai pharmaceutical industry boasts significant opportunities in research and development, with its standards increasingly aligning with international benchmarks. 

 

This positions the sector for further advancement, aiming to become a new S-Curve for economic growth and establish Thailand as a medical hub within Southeast Asia, attracting substantial foreign investment.

 

Data from Kasikorn Research Center indicates the domestic pharmaceutical market was worth 240 billion baht in 2023, with imports accounting for 70% (168 billion baht) and domestic production 30% (72 billion baht). 
  

The sector has seen an average annual growth of 11%, with hospitals representing the largest channel (171.36 billion baht, 71.4% share, 15% growth) and pharmacies accounting for 48 billion baht (20% share, 5% annual growth). The cosmeceuticals, vitamins, and supplements market was valued at 20.64 billion baht (8.6% share, 2% growth).

 

IQVIA data from Q3 2023 highlights the domestic drug manufacturing industry's 11% annual growth, marking it as a standout sector due to the fundamental human need for its products.

 

While the immediate impact on Thai public health remains uncertain, close monitoring is crucial, particularly regarding future trade negotiations.

 

Concerns linger over potential price increases for imported medicines and medical supplies if the US successfully pressures Thailand to increase imports of higher-priced American products.

 

Furthermore, complex trade conditions could restrict access to vital medicines and new medical technologies from the US. Increased competition from potentially favourably treated US imports could also challenge the domestic pharmaceutical industry, given Thailand's significant reliance on foreign-sourced drugs. This necessitates careful and considered policymaking.

(2025/04/08-00:00)