Big pharmaceutical names took another bath Thursday after the Trump administration said the 90-day delay for reciprocal tariffs doesn't apply to sector-specific tariffs.
This means tariffs could be coming for drug imports — and soon.
"We anticipate very high tariffs on 'pharma tax haven' countries such as Ireland — possibly even higher than the April 2 figures," Leerink Partners analyst David Risinger said in a client note. "We make this statement since President Trump has stated that pharma tariffs could be '25% or higher.' "
The tariffs news slammed pharmaceutical stocks. On the S&P 500, shares of Bristol Myers Squibb were hardest hit, falling 6.1% as AbbVie stock lost 3.1%. Pfizer shed 4%, while Gilead Sciences lost 3.7%. Their brethren on the Dow Jones Industrial Average also plowed lower, with Merck and Amgen down 5.3% and 3.3%, respectively. Johnson & Johnson held its loss to under 2%.
Meanwhile, Investor's Business Daily's Medical-Biomed/Biotech and Medical-Ethical Drugs industry groups each skidded a respective 3% and 4.1%.
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Trump Tariffs Rattle Pharma Stocks — Again
Pharmaceutical stocks celebrated Wednesday after President Donald Trump announced on Truth Social that he would delay tariffs for 90 days for more than 75 trading partners who called to discuss trade-barrier issues. The announcement came just hours after Trump said during a dinner for the National Republican Congressional Congress that he would soon levy "major" tariffs on drug imports.
But the celebration was short-lived. During an interview on Wednesday, Treasury Secretary Scott Bessent suggested that the pause on tariffs only applied to country-specific reciprocal tariffs. In response to a reporter's question, White House Press Secretary Karoline Leavitt confirmed the administration is still planning to announce pharmaceuticals tariffs in the near term.
Trump's administration plans to launch an investigation into whether to apply tariffs on drug imports, according to Politico Pro. But the president, under the International Emergency Economic Powers Act, could still levy tariffs on pharmaceuticals in the meantime, Leerink's Risinger said. This law allows the president to take action threats to national security, foreign policy or the economy.
"Hence, sectoral tariffs on Pharma could be announced next week since Trump stated on Tuesday, April 8, that Pharma tariffs are coming 'very shortly,'" Risinger said.
2025 Guidance Could Stay Intact
There's no quick fix for pharma companies, Risinger said.
The investigation would allow the Trump administration to formalize tariffs put into place under the IEEPA, meaning the Supreme Court couldn't easily reverse them. And moving operations stateside is an expensive process that could take years.
"Redomiciling manufacturing would take years and be very costly," he said. He also noted redomiciling intellectual property "can be very costly due to exit taxes from current locations and potentially high taxes from the U.S."
But it's also possible Trump's tariffs won't push biopharma companies to cut their guidance for 2025. Biopharma companies are likely shipping drug product to the U.S. ahead of potential tariffs, he said.
"This is good news, because we had feared that branded companies might have to pull 2025 guidance in conjunction with earnings calls (assuming they occur after pharma tariffs are announced)," he said. "If they can onshore >9 months supply for most drugs ahead of tariffs going into effect, then the impacts would not be felt until 2026."
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
