KUALA SELANGOR, April 14 — Health Minister Dzulkefly Ahmad revealed today the expected direct and indirect impact of United States tariffs on Malaysia’s health care sector, primarily medical devices and pharmaceuticals.
On Malaysia’s health-related exports to the US, medical devices at RM13.69 billion (US$3.07 billion) last year far exceeded pharmaceuticals at RM560 million (US$130 million).
Malaysia’s total global exports of medical devices in 2024 amounted to RM37.03 billion (US$8.3 billion), with the US accounting for 36.97 per cent of the total export value.
Of Malaysia’s RM13.69 billion export of medical devices to the US, surgical and examination gloves comprised 36.6 per cent at RM5.01 billion (US$1.12 billion).
Malaysia’s total global exports of pharmaceutical products in 2024 amounted to RM3.03 billion (US$680 million), with exports to the US accounting for 18.48 per cent of the total export value.
(The conversion figures are based on US$1 = RM4.46, as of December 31, 2024.)
“The cost of imported drugs and medical devices will increase if the active pharmaceutical ingredients (API) used in the drugs or the components in the medical devices are affected by the tariffs,” said Dzulkefly, according to the written text of his talking points at a press conference on the launch of KPJ Kuala Selangor Specialist Hospital here.
“Local generics producers may incur higher costs in procuring API from abroad due to increased demand from the US pharmaceutical suppliers.”
The Ministry of Health (MOH) listed two pharmaceutical companies based in Malaysia that export products to the US: Novugen Pharma Sdn Bhd (cancer therapies and cardiology drugs like abiraterone, sunitinib, pazopanib, midodrine, and SAC VAL) and Biocon Sdn Bhd [insulin glargine (rDNA) and solution for injection in a vial].
Novugen Pharma is a wholly-owned subsidiary of United Arab Emirates (UAE)-based group SciTech International, with a pharmaceutical manufacturing facility in Bandar Enstek, Negeri Sembilan. Biocon, owned by India’s Biocon Biologics Limited, runs an RM1.5 billion insulin manufacturing facility in Johor.
“If MOH continues to procure the same drugs from the US, there would be an increase in the cost of procurement if the US proceeds to impose reciprocal tariffs on ingredients used in these products,” said Dzulkefly.
When asked if the MOH was open to price renegotiations with its pharmaceutical suppliers in light of the US tariffs, he told reporters: “Of course, that’s the way to do it – price renegotiations.”
He added that, however, it was not up to him to review MOH contracts, but the Ministry of International Trade and Industry (MITI) and the Ministry of Finance (MOF).
Dzulkefly said the MOH engaged various trade groups last April 9, such as the Pharmaceutical Association of Malaysia (PhAMA) that mostly represents pharmaceutical multinational corporations, the Malaysian Organisation of Pharmaceutical Industries (MOPI) that represents local generics producers, the Malaysian Association of Pharmaceutical Suppliers (MAPS) that represents local importers of foreign generics, the Malaysia Medical Device Association (MMDA) that represents local producers of medical devices, and the Association of Malaysian Medical Industries (AMMI) that represents local traders of imported medical devices.
Dzulkefly’s written talking points today with a focus on APIs – based on industry views from the April 9 meeting – appear to be outdated. While pharmaceuticals were exempt from the US’ Liberation Day reciprocal tariffs announced on April 2 (medical devices were never exempt), President Donald Trump said on April 9 (morning local time) that the US will soon announce a major tariff on imported pharmaceuticals.
US commerce secretary Howard Lutnick also announced last night that besides semiconductor tariffs, the US will impose sector-specific tariffs on pharmaceuticals, saying: “We need to have medicines built in America.”
Like most countries, Malaysia is currently subject to a 10 per cent baseline tariff from the US for 90 days from last April 9. The initial reciprocal tariff on all Malaysian goods was 24 per cent.
MAPS has requested for the right to review contract prices with the MOH if global trade disruptions lead to large fluctuations in procurement costs.
‘Non-Tariff Barriers’ In Public Health Care: Bumiputera Tender Agents, Offtake Policy
According to Dzulkefly’s talking points, the US Trade Representative (USTR) has identified various non-tariff barriers in Malaysian health care provided by the government, notably the legal requirement for the appointment of local Bumiputera agents for tenders by foreign companies and the MOH’s offtake policy.
The MOH’s offtake programme seeks to incentivise local pharmaceutical companies by offering three-year contracts to produce certain off-patent drugs that currently only have single product registration holders (PRH).
The three-year government contract can be extended by another two years if local pharmaceutical companies export their products.
“Malaysia is not a party to the WTO (World Trade Organization) Agreement on Government Procurement, but has been an observer to the WTO Committee on Government Procurement since July 2012,” said Dzulkefly, referencing another non-tariff barrier flagged by USTR.
Interestingly, Dzulkefly’s talking points did not cite intellectual property (IP) issues with pharmaceuticals as a non-tariff barrier flagged by USTR.
The health minister said one of the responses to USTR concerns about MOH’s offtake policy is that local pharmaceutical companies will only receive a commitment from the government to procure up to a maximum of 50 per cent of the contracted volume, while the balance will be offered on a tender basis.
“The offtake programme is offered to both domestic and foreign investors, including the US,” said Dzulkefly.
He did not mention any response to the requirement for Bumiputera tender agents in the procurement of pharmaceuticals by multinational drug makers, which is an MOF rule.
“As the health minister, I’m only looking at medical devices and pharmaceuticals. We will continue to monitor and provide the latest updates. There is only one certainty, which is uncertainty. We will continue monitoring with full accountability to the people,” Dzulkefly told reporters.
