Potential U.S. Tariffs on Pharmaceuticals Expected to Have Minimal Impact on Alvotech’s Product Revenues in 2025

Rhea-AI Summary

Alvotech (NASDAQ: ALVO), a global biotech company specializing in biosimilar medicines, has announced that potential U.S. tariffs on imported pharmaceuticals should have minimal impact on its 2025 product revenues. The company, which manufactures its biosimilars in Iceland, faces a minimum 10% tariff on U.S. imports. This tariff would increase costs for U.S. customers by less than 1% of Alvotech's expected 2025 product revenues.

According to contracted terms, customers are responsible for transport costs and import duties, not Alvotech. CEO Robert Wessman noted that Iceland's favorable trade balance with the U.S. makes higher tariffs unlikely, and emphasized that biosimilars remain the most cost-effective way to increase patient access to vital biologics. Beyond 2025, even with anticipated product launches and increased sales, the tariff impact would still represent a low single-digit percentage of total product revenues.

Positive

• Minimal financial impact expected from U.S. tariffs (less than 1% of 2025 product revenues)
• Customers, not Alvotech, are responsible for import duties and transport costs
• Iceland's favorable trade balance with U.S. suggests low risk of increased tariffs
• Company anticipates product launches and increased sales beyond 2025

Negative

• Company faces 10% minimum tariff on U.S. imports
• Potential for increased costs to U.S. customers

Insights

Financial Analyst specializing in Biopharmaceuticals

Alvotech reassures investors that new U.S. pharmaceutical tariffs will have negligible revenue impact due to contractual protections and Iceland's favorable trade status.

Alvotech's strategic announcement directly addresses market uncertainty surrounding potential U.S. tariffs on imported pharmaceuticals. The company has effectively insulated itself from financial exposure through two key mechanisms: First, their manufacturing location in Iceland currently faces only the minimum 10% tariff rate, and second, their contract structure places responsibility for all transport costs and import duties on customers rather than Alvotech.

The quantitative impact is notably minimal - the 10% tariff would increase costs for U.S. customers by less than 1% of Alvotech's expected 2025 product revenues. Even beyond 2025, factoring in anticipated product launches and sales growth, management projects tariff impact would remain in the low single-digit percentage of total product revenues.

This disclosure effectively neutralizes a significant market concern for a company operating in the internationally-integrated biosimilar space. Alvotech's manufacturing centralization in Iceland - a country with a positive trade balance with the U.S. - appears strategically advantageous under current trade policies. The CEO's proactive communication signals confidence in both their business model resilience and their understanding of the regulatory environment for biosimilars.

From an investor perspective, this clarification removes a potential uncertainty without introducing new concerns, effectively maintaining the status quo for Alvotech's financial outlook while demonstrating management's awareness of market sensitivities to trade policy shifts.

Alvotech (NASDAQ: ALVO) (the “Company”) a global biotech company specializing in the development and manufacture of biosimilar medicines for patients worldwide, today issued a statement on the anticipated impact of potential tariffs on imported pharmaceuticals to the United States. Alvotech expects that potential U.S. tariffs on imported pharmaceuticals should have minimal impact on the Company’s product revenues in 2025. Alvotech manufactures its biosimilars in Iceland, a country which currently faces the minimum tariff of 10% on goods imported to the U.S. A 10% tariff on pharmaceuticals would raise the cost of biosimilars from Alvotech imported to the U.S. for customers by less than 1% of Alvotech’s expected total product revenues in 2025. Furthermore, according to contracted terms, customers are responsible for all costs of transport and import duties to the U.S., and these costs are therefore not expected to be paid by Alvotech.

“With the lingering uncertainty in the market about tariffs, and companies planning accordingly, I feel that it is important to communicate clearly about this issue. We manufacture all our biosimilars in Iceland, a country which imports more goods from the U.S. than it exports to the U.S., and is therefore only subject to the minimum 10% tariff introduced in April. Because a favorable U.S. trade balance is one of the key objectives of the new tariff policy, we have currently no reason to believe that a much higher tariff would be applied to pharmaceuticals from Iceland than on other goods. I expect that policy makers will also take into account that biosimilars offer the most cost-effective means of increasing patient access and lowering the cost of vital biologics for U.S. patients,” said Robert Wessman, chairman and CEO of Alvotech. “The estimated impact of a 10% tariff on our sales to the U.S. in the second half of the year would be less than 1% of our expected product revenues in 2025, and these cost would not be paid by Alvotech. Looking beyond 2025, given anticipated product launches and increased sales, we estimate that the impact would still constitute a low single digit percentage of Alvotech’s anticipated total product revenues.”

About Alvotech
Alvotech is a biotech company, founded by Robert Wessman, focused solely on the development and manufacture of biosimilar medicines for patients worldwide. Alvotech seeks to be a global leader in the biosimilar space by delivering high quality, cost-effective products, and services, enabled by a fully integrated approach and broad in-house capabilities. Two biosimilars, to Humira® (adalimumab) and Stelara® (ustekinumab) are already approved and marketed in multiple global markets. The current development pipeline includes nine disclosed biosimilar candidates aimed at treating autoimmune disorders, eye disorders, osteoporosis, respiratory disease, and cancer. Alvotech has formed a network of strategic commercial partnerships to provide global reach and leverage local expertise in markets that include the United States, Europe, Japan, China, and other Asian countries and large parts of South America, Africa and the Middle East. Alvotech’s commercial partners include Teva Pharmaceuticals, a US affiliate of Teva Pharmaceutical Industries Ltd. (US), STADA Arzneimittel AG (EU), Fuji Pharma Co., Ltd (Japan), Advanz Pharma (EEA, UK, Switzerland, Canada, Australia and New Zealand), Dr. Reddy’s (EEA, UK and US), Biogaran (FR), Cipla/Cipla Gulf/Cipla Med Pro (Australia, New Zealand, South Africa/Africa), JAMP Pharma Corporation (Canada), Yangtze River Pharmaceutical (Group) Co., Ltd. (China), DKSH (Taiwan, Hong Kong, Cambodia, Malaysia, Singapore, Indonesia, India, Bangladesh and Pakistan), YAS Holding LLC (Middle East and North Africa), Abdi Ibrahim (Turkey), Kamada Ltd. (Israel), Mega Labs, Stein, Libbs, Tuteur and Saval (Latin America) and Lotus Pharmaceuticals Co., Ltd. (Thailand, Vietnam, Philippines, and South Korea). Each commercial partnership covers a unique set of product(s) and territories. Except as specifically set forth therein, Alvotech disclaims responsibility for the content of periodic filings, disclosures and other reports made available by its partners. For more information, please visit https://www.alvotech.com. None of the information on the Alvotech website shall be deemed part of this press release.

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Alvotech Forward Looking Statements
Certain statements in this communication may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements generally relate to future events or the future financial operating performance of Alvotech and may include, for example, Alvotech’s expectations regarding competitive advantages, business prospects and opportunities including pipeline product development, future plans and intentions, results, level of activities, performance, goals or achievements or other future events, regulatory submissions, review and interactions, the potential approval and commercial launch of its product candidates, the timing of regulatory approval, and market launches. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential”, “aim” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Alvotech and its management, are inherently uncertain and are inherently subject to risks, variability, and contingencies, many of which are beyond Alvotech’s control. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) material impacts of import duties or restrictions on import in markets where Alvotech’s products are sold or expected to be sold; (2) Alvotech’s ability to maintain stock exchange listing standards; (3) changes in applicable laws or regulations; (4) the possibility that Alvotech may be adversely affected by other economic, business, and/or competitive factors; (5) Alvotech’s estimates of expenses and profitability; (6) Alvotech’s ability to develop, manufacture and commercialize the products and product candidates in its pipeline; (7) actions of regulatory authorities, which may affect the initiation, timing and progress of clinical studies or future regulatory approvals or marketing authorizations; (8) the ability of Alvotech or its partners to respond to inspection findings and resolve deficiencies to the satisfaction of the regulators; (9) the ability of Alvotech or its partners to enroll and retain patients in clinical studies; (10) the ability of Alvotech or its partners to gain approval from regulators for planned clinical studies, study plans or sites; (11) the ability of Alvotech’s partners to conduct, supervise and monitor existing and potential future clinical studies, which may impact development timelines and plans; (12) Alvotech’s ability to obtain and maintain regulatory approval or authorizations of its products, including the timing or likelihood of expansion into additional markets or geographies; (13) the success of Alvotech’s current and future collaborations, joint ventures, partnerships or licensing arrangements; (14) Alvotech’s ability, and that of its commercial partners, to execute their commercialization strategy for approved products; (15) Alvotech’s ability to manufacture sufficient commercial supply of its approved products; (16) the outcome of ongoing and future litigation regarding Alvotech’s products and product candidates; (17) the impact of worsening macroeconomic conditions, including rising inflation and interest rates and general market conditions, conflicts in Ukraine, the Middle East and other global geopolitical tension, on the Company’s business, financial position, strategy and anticipated milestones; and (18) other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in documents that Alvotech may from time to time file or furnish with the SEC. There may be additional risks that Alvotech does not presently know or that Alvotech currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Alvotech does not undertake any duty to update these forward-looking statements or to inform the recipient of any matters of which any of them becomes aware of which may affect any matter referred to in this communication. Alvotech disclaims any and all liability for any loss or damage (whether foreseeable or not) suffered or incurred by any person or entity as a result of anything contained or omitted from this communication and such liability is expressly disclaimed. The recipient agrees that it shall not seek to sue or otherwise hold Alvotech or any of its directors, officers, employees, affiliates, agents, advisors, or representatives liable in any respect for the provision of this communication, the information contained in this communication, or the omission of any information from this communication.

ALVOTECH INVESTOR RELATIONS AND GLOBAL COMMUNICATIONS
Benedikt Stefansson, VP
alvotech.ir@alvotech.com

FAQ

How will U.S. tariffs impact Alvotech (ALVO) revenues in 2025?

The 10% tariff on pharmaceuticals is expected to have minimal impact, raising costs by less than 1% of Alvotech's expected total product revenues in 2025.

Who will pay for the import tariffs on Alvotech's biosimilars?

According to contracted terms, Alvotech's customers are responsible for all costs of transport and import duties to the U.S., not Alvotech.

What is the current tariff rate for Alvotech's products imported from Iceland to the U.S.?

Iceland currently faces the minimum tariff of 10% on goods imported to the U.S.

What is Alvotech's long-term outlook regarding U.S. tariffs beyond 2025?

Even with anticipated product launches and increased sales beyond 2025, the tariff impact would still constitute a low single-digit percentage of total product revenues.

Why does Alvotech expect Iceland to maintain minimum tariff rates with the U.S.?

Iceland imports more goods from the U.S. than it exports, creating a favorable trade balance that aligns with U.S. tariff policy objectives.