The Trump Administration has recently issued an executive order imposing a 100% tariff on patented pharmaceutical products imported into the United States unless manufacturers agree to government drug pricing arrangements or commit to producing the drugs domestically.
Generic pharmaceutical products, biosimilars, and associated ingredients are not subject to tariffs at this time though this will be reassessed in one year, points out Tan in her April 7 note.
"The implications for UltraGreen.ai should be limited as indocyanine green is classified as a generic drug and therefore falls under the current tariff exemption," says Tan, referring to UltraGreen.ai's key product.
"Even if the tariff regime were eventually extended to include generics, we believe demand for indocyanine green would remain relatively price inelastic and Ultragreen.ai should be able to pass on any tariff related cost increases to customers," she says.
To put things into better perspective, Tan points out that the indocyanine green dye sold by UltraGreen.ai represents only a small portion of overall surgical procedure costs, with an average selling price of about US$90 to US$200 per vial, while its use improves visualisation during surgery and reduces the risk of complications.
"As such, surgeons are unlikely to materially reduce usage even if prices rise," she reasons.
In addition, UltraGreen.ai's indocyanine green vials and kits for the Americas are packaged, serialised and labelled at the Praxis facility in Michigan, and not imported from other countries, which could thus provide an additional mitigating factor against potential tariffs.
See also: UOBKH's Mo raises Oiltek's target price to $2.78 following Sabah plant win
"In our view the continued adoption of fluorescence guided surgery, supported by a growing body of clinical evidence and expanding regulatory approvals across multiple markets, should remain the key driver of demand for UltraGreen.ai’s products," says Tan.
Trading at just 19x FY2026 and 16x FY2027 earnings, Tan believes this counter is now changing hands at an attractive valuation level.
UltraGreen.ai shares gained 2.1% to trade at US$1.46 as at 1.53pm.
