Australian biotechnology company PolyNovo Ltd (ASX: PNV) has joined major blood products company CSL Ltd (ASX: CSL) in hosing down concerns about the US Government's recent announcement of a 100% tariff on foreign made pharmaceutical products.
PolyNovo's flagship product is NovoSorb BTM, which is a "dermal scaffold" that aids in the regeneration of skin following trauma, burns, or surgery.
The company said in a statement to the ASX on Tuesday that its products were designated as medical devices and were therefore subject to a 10% tariff, rather than the proposed 100% tariff on drugs.
The company has previously advised that it does not anticipate a material impact from that (10%) tariff. On behalf of our U.S. surgeons, patients and shareholders, PolyNovo will continue to advocate strongly for a tariff exemption, especially for products used in Veterans Affairs, Defence and mass disasters.
PolyNovo said it already had about a year's worth of inventory in the US, with the capacity to increase inventory quickly if necessary.
PolyNovo shares traded as high as $1.44 after the announcement was made, before settling back to be 2.5% higher at $1.41.
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CSL also unconcerned about tariff impact
CSL, the $96.5 billion blood products giant, told the ABC recently that the company did not expect any material impact from the tariff, which is set to come into force on October 1.
The company said it had a "very significant" US manufacturing footprint already and had announced further significant capital expenditure.
US President Donald Trump recently threatened the new tariffs on imported drugs, with the caveat that companies that were building new manufacturing sites in the US would be exempt.
CSL has not made any statements to the ASX regarding the pharmaceutical tariff threat, which is to be expected given the company is not expecting a material impact.
As reported elsewhere by The Motley Fool's Tristan Harrison, UBS has retained its buy rating on CSL shares, stating that the company could employ certain strategies to mitigate the impact of the tariff. As UBS said:
The most likely mitigation opportunity for CSL comes from a company-wide tariff exemption deal associated with the acceleration of its US fractionation facility. The investment would cost US$1.5-2.0bn and could likely form part of CSL's Horizon 2 manufacturing initiatives to significantly lift IG (immunoglobulin) product yields.
President Trump also just this week announced a fresh threat to impose 100% tariffs on foreign made films, after first raising the idea in May.
CSL shares were 0.4% lower at $198.18 on Tuesday, not far off their 12-month low of $189.80. The company's shares have traded as high as $304.99 over the past year.
PolyNovo was valued at $953.4 million at the close of trade on Monday.
