Trump Tariff On Pharma Proves Costly For Asian Drugmakers, EU Peers Not So Much
Stock markets had braced for pharma tariffs and analysts said the impact on nearly all pharma companies should be limited.
US President Donald Trump's 100% tariff on pharma imports dragged down stocks of Asian drugmakers but those in the European Union were largely steady.
In Europe, Genmab, Zealand Pharma, UCB , Galderma were down between 1.3% and 2.4%. Bayer and Novo Nordisk slipped 0.2% and 1%, respectively, while Merck rose 0.4%. Swiss drugmakers Roche, Novartis and Lonza rose between 0.1% and 1.2%. In Asia, Japan's Sumitomo Pharma fell 3.5%, while Australia's CSL hit a six-year low.
In India, the Nifty Pharma index fell more than 2% with industry heavyweight Sun Pharmaceutical Industries Ltd. down 3% and Biocon Ltd. down nearly 5%. Analysts, however, saw the declines as “sentimental” at best.
Trump Tariff On Pharma
On Friday, US President Donald Trump announced 100% tariffs on imports branded drugs from 1 October 2025, unless their manufacturers have begun building US plants.
Markets had braced for pharma tariffs and analysts said the impact on nearly all pharma companies should be limited. Most have a US presence and have announced large investments to come. Many Asian companies are focused on generic drugs, meaning tariffs on brands do not affect them.
{{/usCountry}}Markets had braced for pharma tariffs and analysts said the impact on nearly all pharma companies should be limited. Most have a US presence and have announced large investments to come. Many Asian companies are focused on generic drugs, meaning tariffs on brands do not affect them.
{{/usCountry}}“A lot of investors were expecting these kinds of tariffs and it was partly reflected in valuations in the healthcare sector,” Nabil Milali, a portfolio manager at Edmond de Rothschild Asset Management in Paris, told Reuters.
{{/usCountry}}“A lot of investors were expecting these kinds of tariffs and it was partly reflected in valuations in the healthcare sector,” Nabil Milali, a portfolio manager at Edmond de Rothschild Asset Management in Paris, told Reuters.
{{/usCountry}}“There's also some expectations that this will not be the end game. Probably it's a starting point to start negotiations with the European and international pharmaceutical companies.”
{{/usCountry}}“There's also some expectations that this will not be the end game. Probably it's a starting point to start negotiations with the European and international pharmaceutical companies.”
{{/usCountry}}Lorraine Tan, director of equity research for Asia at Morningstar, said the final tariff rate should be lower given the pattern of negotiations so far, but that near-term uncertainty could weigh on share prices.
The Generic Drugs Angle
{{/usCountry}}Lorraine Tan, director of equity research for Asia at Morningstar, said the final tariff rate should be lower given the pattern of negotiations so far, but that near-term uncertainty could weigh on share prices.
The Generic Drugs Angle
{{/usCountry}}Other analysts expected a limited impact on Asian drugmakers, as many focus on generic drugs, especially in China and India.
Europe and also Japan should get some shelter as a result of trade deals, although industry representatives said this was not yet clear.
The European Union has a trade deal with the U.S. for a 15% tariff on goods, including pharmaceuticals, while Japan has an agreement that its tariff rates will not exceed others including the EU.
“The market is calling (Trump's) bluff,” Ken Peng, head of Asia investment strategy at Citi Wealth, told Reuters. “We see some Asian pharma names down pretty significantly today, but if people really believe that large swathes of branded pharma will be tariffed at 100%, it wouldn't be a 3% correction.”
ALSO READ | The Impact Of Trump Tariff On Pharma Is Limited At Best
US Pharma Industry
Around 60% of US pharma imports in 2024 came from the European Union, according to UN Comtrade data.
Switzerland, which is not an EU member, was the second-biggest exporter at 9%. Japan exported $2.5 billion of pharmaceutical products to the US in 2024, according to the data.
Many global drugmakers have announced multi-billion dollar investment plans in the US this year to mitigate the impact of tariffs. They include AstraZeneca, Roche, Eli Lilly, Johnson & Johnson, Novartis and Sanofi.
A source at a Taiwan-based pharmaceutical company that makes branded drugs said on the condition of anonymity that it could take at least five years to build and certify a new US plant, without taking into account any supply chain or labour shortage issues.
The biggest losers ultimately would be those who need medicine.
Mark Butler, health minister in Australia, which sold around $1.37 billion in medicines to the US last year, told reporters the government was working to understand the implications of the “unfair, unjustified tariffs after 20 years of free trade”.
Industry players also voiced concern.
“This is another slap in the face and a new low for trade relations with the US. If the 15% deal does not apply to pharmaceutical products, it is worthless,” the German chemical lobby, known as VCI, said in a statement.
With inputs from Reuters.
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