Trump Tariffs Miss Pharma For Now, But Uncertainties Loom

Pharma’s reprieve from Donald Trump’s tariffs is expected to be temporary, with Leerink analysts anticipating possible sector-specific duties “in the next month or so.”

Pharma products were excluded from the sweeping tariffs announced by President Donald Trump Wednesday afternoon, according to a fact sheet from the White House, giving the industry a tense and likely temporary respite.

Trump slapped a 10% tariff across the board on all imported products, plus additional tariffs on certain countries with which the U.S. has “the largest trade deficits,” as determined by the administration, which Trump called “reciprocal tariffs.” Certain goods from China, for instance, will be subject to a 35% tariff, while levies on the European Union, Japan and India will hit 20%, 24% and 26%, respectively.

In a Wednesday note to investors, Jefferies analysts wrote that they expect the tariffs to have a “minimal” impact on the pharma industry, particularly as Trump explicitly exempted pharmaceuticals from the reciprocal levies. Still, Jefferies noted that other components of pharma manufacturing could be affected.

Active pharmaceutical ingredients (APIs) that are imported could be affected by the tariffs, according to the analysts, who pointed to a recent survey by trade group Biotechnology Innovation Organization, which found that “nearly 90% of US biopharma [companies] rely on imported API for ‘at least half’ of FDA-approved product.”

That report, released last week, also showed that more than 90% of responding pharma companies believed tariffs would increase production costs, while around half would be forced to look for new research and manufacturing partners. Some 40% of respondents said they would need more than two years to adjust their supply chains.

Analysts at Leerink Partners on Wednesday also flagged the potential of pharma tariffs in the future, “possibly in the next month or so.” If Trump does decide to implement sector-specific duties on pharma, other companies will likely respond, they said, adding that “we see risks from reciprocal actions by ex-US countries.”

Both Leerink and Jefferies are also keeping their eyes on potential tariffs aimed at pushing companies to reshore their manufacturing operations. At a closed-door event in February, Trump met with some of the biggest names in pharma—including Pfizer CEO Albert Bourla, Lilly CEO David Ricks and Merck CEO Robert Davis—and threatened them with tariffs if they didn’t move their manufacturing footprints back to the U.S.

In the following days, Lilly announced a $27 billion boost to its U.S. footprint—money that will help construct four production plants over the next five years. J&J followed suit last month, unveiling a $55 billion investment into its U.S. manufacturing and R&D operations.

Tristan is an independent science writer based in Metro Manila, with more than eight years of experience writing about medicine, biotech and science. He can be reached at tristan.manalac@biospace.com, tristan@tristanmanalac.com or on LinkedIn.
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