US President Donald Trump’s recent announcement signalling major tariffs on pharmaceutical imports has caused significant disruptions in global markets.
Previously exempt, the pharmaceutical sector now faces country-specific reciprocal tariffs.
The Trump administration aims to incentivise drug companies to relocate their operations to the US, regardless of industry experts expressing concerns over the complexities involved.
Shares of major US pharmaceutical companies, including AbbVie, Amgen, Eli Lilly, Merck, and Pfizer, experienced a 3% to 6% decline in premarket trading.
In Europe, healthcare stocks dropped 5%, marking their lowest level since October 2022 and leading losses on the STOXX 600 index, which fell 3.3% by 1013 GMT.
The index was on track for its largest single-day decline since March 2020.
BMO Capital Markets analyst Evan Seigerman told Reuters: “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 US.
“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.”
The US and Europe’s supply chains for medicines are deeply interconnected, where the US depends on medicines partially produced in Europe.
According to the Eurostat data, the European Union’s (EU) exports of medical and pharmaceutical products to the US amounted to nearly €90bn in 2023.
Shares of European Drugmakers AstraZeneca, GSK, Novartis, Roche, and Sanofi fell between 5% and 6.5%.
Meanwhile, Indian pharmaceutical stocks ended nearly 2% lower, impacting the Nifty 50 index, which decreased by 0.6%.
IPCA Laboratories, Biocon, and Glenmark Pharma were the top decliners on Mumbai’s pharma index, closing between 4% and 5.5% lower.
The US accounts for one-third of India’s pharma exports, primarily comprising generic drugs.
