Global pharma shares plunge as Trump doubles down on tariff threat

Global drugmakers’ stocks dropped across the board on Wednesday after U.S. President Donald Trump reiterated plans for a “major” tariff on pharmaceutical imports, threatening an interwoven supply chain across the world, and as his country-specific reciprocal tariffs took effect, leading to more pain in global markets.

Pharmaceutical imports were initially exempt from Trump’s first set of reciprocal tariffs last week but his administration has since indicated that levies on the sector, which in the past has been excluded from such actions, are coming.

The U.S. president has said the tariffs will incentivize drug companies to move operations to the U.S. However, analysts and companies have raised concerns about the difficulty in setting up manufacturing in the United States.

Shares of major U.S. drugmakers such as Gilead Sciences, Pfizer, Merck and Eli Lilly fell between 2% and 4% in premarket trading.

In Europe, a basket of healthcare stocks .SXDP fell 5% to its lowest since October 2022, leading losses among sectoral indexes on the region-wide STOXX 600. The index was heading for its biggest one-day drop since March 2020.

Trump had also threatened the duties on Friday after his first set of “reciprocal” tariffs exempted pharma products. Trump has not said when and by how much he plans to raise taxes on pharma imports.

“While the details are scant, we are strongly opposed to tariffs on any pharmaceuticals — these will likely do little to shift manufacturing back to the U.S.,” said BMO Capital Markets analyst Evan Seigerman.

“Given the complexity of the pharma supply chain, we do not expect the industry to make any major changes. These current tariffs are being pursued under emergency powers, which at worse will last until the end of the current administration and could end sooner with an act of Congress,” Seigerman added.

Europe and the U.S. have interconnected supply chains for medicines. The U.S. depends on medicines partly produced in Europe that bring in hundreds of billions of dollars in revenue.

E.U. medical and pharmaceutical product exports to the U.S. totalled about 90 billion euros ($97 billion) in 2023, according to the latest Eurostat data.

Barclays analysts said in a note last week that Europe accounted for about 80% of the U.S. trade deficit in biopharma.

They highlighted companies with a high share of U.S. revenue or limited U.S. manufacturing sites as potentially more affected, such as Argenx, UCB, or Novo Nordisk.

Shares of AstraZeneca, GSK, Roche, Sanofi , and Novartis fell between 5% and 6.5% in Europe.

In contrast, companies like AstraZeneca, Roche and Sanofi could be more immune given their diverse global manufacturing network and increasing manufacturing capabilities in the U.S., Barclays’ analysts said.

Meanwhile, Indian pharmaceutical stocks closed nearly 2% lower, dragging down the benchmark Nifty 50 by 0.6%.

IPCA Laboratories, Glenmark Pharma and Biocon were the top losers by percentage on the pharma index in Mumbai, ending the trading session between 4% and 5.5% lower.

India’s pharma exports to the U.S. mostly comprise generics, or cheaper versions of popular drugs. The U.S. accounts for a third of India’s overall pharma exports.