Vanda Pharmaceuticals Inc.

Current report

Our business may be materially adversely affected by the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures implemented by the U.S. and other governments.

Current report

Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we or our third-party suppliers manufacture or source products, could have a material adverse effect on our business and financial results. Recently there have been significant changes to U.S. trade policies, sanctions, legislation, treaties and tariffs, including, but not limited to, trade policies and tariffs affecting products from outside of the U.S. On April 2, 2026, the President issued a proclamation under Section 232 of the Trade Expansion Act of 1962, following the completion of the U.S. Department of Commerce’s Section 232 investigation intothe national security implications of pharmaceutical and active pharmaceutical ingredients (API) imports, imposing a 100% ad valorem tariff on imports of patented pharmaceutical products and associated pharmaceutical ingredients, including APIs. For the large pharmaceutical companies identified in the proclamation, the tariffs become effective on July 31, 2026; for all other importers, the tariffs become effective on September 29, 2026. The proclamation provides for reduced or zero tariff rates in certain circumstances, including exemptions for generic pharmaceuticals, U.S.-origin products, and certain specialty products, such as drugs for which all approved indications carry orphan drug designation under the Orphan Drug Act, subject to specified conditions. We do not have in-house manufacturing capability and depend on a limited number of third-party manufacturers and API formulators, certain of which are located outside the U.S. or source APIs, raw materials, laboratory equipment and research material and components from other countries. To the extent the new tariffs apply to our products or their inputs and are not subject to an exemption or reduced rate, they could increase our costs and reduce our margins. The extent and duration of these and any future tariffsand trade restrictions, and the resulting impact on general economic conditions and our business, are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, the availability and scope ofexemptions or exclusions that may be granted, including any orphan drug exemption potentially relevant to certain of our products, the outcome of any legal challenges to these measures and the availability and cost of alternative sources of supply and availability and cost of alternative locations of manufacturing facility in the U.S. or lower tariff jurisdiction. Introducing a replacement manufacturer or supplier for our products requires a lengthy regulatory an…

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