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American patients would ultimately bear the cost of President Donald Trump's threatened tariffs on generic drugs, the CEO of Swiss pharmaceutical company Sandoz told CNBC, warning that manufacturers could be forced to raise prices or stop supplying some medicines. "Patients pay the tariff," Sandoz CEO Richard Saynor said in an interview with CNBC during its Capital Markets Day. "Any business is not going to systematically continue to supply a product at a material loss," he said on Tuesday. "So you either then have a choice of putting the price [up] or not supplying the product." Trump said in July that imported generic medicines could face tariffs of 100% from 2028, rising to as much as 200% a year later, as his administration seeks to encourage drugmakers to shift pharmaceutical manufacturing to the United States. Generics are currently exempt from the administration's Section 232 pharmaceutical tariffs. CNBC has contacted the White House for comment. Brand-name drugmakers typically spend years developing costly new medicines that, once approved, benefit from exclusivity that allows them to sell those drugs without direct competition for a limited period of time. By contrast, generic drug manufacturers like Sandoz enter the market after patents expire and often compete on price, manufacturing efficiency and scale against other companies selling largely identical versions of the same medicine. Generic medicines account for about 90% of prescriptions in the U.S., but a relatively small share of overall drug spending due to their lower prices. Saynor reiterated that around nine in 10 prescriptions dispensed in the U.S. are for generics and biosimilars, while much of the underlying drug substance is produced outside the country. Sandoz, one of the world's largest makers of off-patent medicines, generates roughly a quarter of its revenue in North America, including Canada. The CEO's comments come as Sandoz announced a new drive to capitalize on what it sees as an unprecedented wave of patent expirations and loss of exclusivity for branded medicines, creating opportunities for new generic and biosimilar competition, particularly in immunology and oncology. Its Swiss-listed shares rose as much as 5% on Tuesday, before paring gains and trading about 1% lower in afternoon trading. Multibillion-dollar opportunity The company said it aims to more than double net sales by 2035 and increase its core profit margin to above 30%. Jefferies analysts noted that the revenue ambition sits about 13% above current consensus for 2035. Sandoz also said it wanted to expand in biosimilars to more than 100 products by 2040, up from 13 currently. RBC analysts called the targets mixed and said the mid-term targets for 2030 look "light." "That said, the 2035 targets are more ambitious and show an expected acceleration through the early 2030s, a rich period for new biosimilar launches," the analysts added. Weight-loss and diabetes GLP-1 drugs represent additional upside that is currently not included in the 2035 sales target, the company said. Asked by CNBC to quantify the opportunity, Saynor said Sandoz's GLP-1 business could bring in "billions of dollars, but I have no idea how many billions of dollars," citing the market's still early days. Sandoz secured approval in Brazil earlier this year to launch generic semaglutide, the active ingredient in Novo Nordisk's Ozempic and Wegovy, and expects Canadian approval soon. Key U.S. and European markets will not lose exclusivity until early next decade. While generic drugs are lower-cost versions of conventional medicines whose patents have expired, biosimilars are highly similar alternatives to more complex biologic medicines. Sandoz plans to target around 80% of the value of biologic drugs losing patent protection from 2035, up from about 50% today. Because biosimilars are more complex, Saynor sees fewer competitors in the space. "There still remains a complex space requiring capital, scale, and technical expertise. The players that can do this are few and far between, and given the sheer scale and number of [loss of exclusivities] ahead, competitive intensity at asset level is expected to reduce," he said. Sandoz became an independent company in 2023 after Swiss pharmaceutical giant Novartis spun off its generics and biosimilars business to focus solely on branded medicines. Saynor has led the business since 2019.
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