Pharmaceutical stocks reacted unevenly worldwide after President Trump announced a sweeping new policy targeting foreign-made branded and patented drugs. The 100% tariff, set to take effect on October 1, 2025, will apply to companies not actively building manufacturing facilities in the U.S.
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump announced on his social media site, Truth Social, on Thursday.
The measure forms part of a broader tariff package, which also includes new duties on large trucks and home goods.
Mixed Reaction Across Regions
In Asia, pharma stocks led broader market declines. Japan’s Nikkei Stock Average closed 0.9% lower, dragged down by steep falls in Sumitomo Pharma (-3.45%), Chugai Pharmaceutical (-4.8%), and Daiichi Sankyo (-2.0%). South Korea’s Samsung Biologics dropped 2.15%, while China’s Alibaba Health and JD Health both fell over 4%.
India also saw losses, with Sun Pharmaceutical Industries sliding 2.9% and Natco Pharma down 3.6%.
Meanwhile, European markets told a more nuanced story. Large-cap players with significant U.S. investment plans—such as AstraZeneca, GSK, Novartis, Roche, and Sanofi—opened lower but recovered, with some finishing the day in positive territory. Smaller firms, however, fared worse: Genmab and Zealand Pharma slipped nearly 2%, while Novo Nordisk shed 1.5%.
U.S. big pharma stocks, by contrast, gained slightly in premarket trading, signaling investor confidence that many industry giants will avoid direct impact.
Analyst See Limited Risk for Big Pharma
Economists and analysts noted that the tariff may be less disruptive than headlines suggest. Neil Shearing, group chief economist at Capital Economics, wrote: “The exemptions for generic drugs and companies constructing U.S. plants will lower the effective tariff rate, as many global firms already have production in the U.S. or plans underway.”
Analysts at Vontobel echoed this view, highlighting that Novartis and Roche should sidestep the worst of the tariffs thanks to ongoing U.S. facility construction. By contrast, companies like Galderma and other smaller players with limited American operations may face more pronounced pressure.
Chinese biotechs also face uncertainty. While direct exposure remains low—China represented just 4% of U.S. drug imports in 2024—Jefferies analysts warned that investor sentiment could dampen expansion plans.
Still, they noted that most Chinese companies partner with U.S. firms, providing a degree of tariff protection.
Broader Market Implications
While regional stock declines reflect near-term volatility, economists expect the long-term impact on major pharmaceutical groups to remain limited. Barclays pointed out that India’s largely domestic orientation, and the exemption of generics, should help soften potential blows to its sector.
The new measures, however, add to global uncertainty in both pharmaceuticals and other industries targeted by Trump’s tariff expansion. Heavy trucks, for example, will face a new 25% import duty starting October 1.
Bottom Line for Investors
For investors, the initial selloff underscores regional vulnerabilities but also highlights resilience among larger pharmaceutical players with entrenched U.S. operations. The policy may intensify consolidation pressures in the industry, pushing smaller biotechs to seek partnerships or accelerate U.S. investment to remain competitive.
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