President Trump sent shockwaves through the pharmaceutical industry after announcing a 100% tariff on all branded or patented pharmaceutical products, effective October 1. He added that foreign companies with plants “‘breaking ground’ and/or ‘under construction'” in the U.S. could avoid the tariff.
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However, a White House official clarified that any country that has signed a trade deal containing drug provisions will also be exempt from the new tariff, according to Bloomberg. The official added that the EU would pay a maximum 15% tariff, while Japan’s agreement with the U.S. stipulates that its pharma tariff should not go beyond those imposed on others.
Foreign Pharma Stocks Brush Off Higher Drug Tariffs
Trump’s announcement hasn’t impacted foreign pharma stocks significantly, with Europe’s Novo Nordisk (NVO) and Roche (RHHBY) only down slightly and Japan’s Takeda Pharmaceutical (TAK) in the green. Analysts argue that the tariffs aren’t surprising and may have already been priced into valuations. In addition, many foreign pharma companies already have plans to invest in U.S. drug production.
“There are also expectations this will not be the end game of the Trump administration, but a starting point for negotiations,” said Edmond de Rothschild Asset Management portfolio manager Nabil Milali.
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