Leading global drugmakers traded higher on Friday as Wall Street digested President Donald Trump’s latest tariff announcement targeted at brand-name pharmaceuticals made by companies without any ongoing U.S. investments.
“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 said in a social media post late Thursday.
While shares of Japanese and EU drugmakers came under pressure after the announcement, the VanEck Vectors Pharmaceutical ETF (NASDAQ:PPH), which represents 25 leading global pharma stocks, added ~1%, ending a five-day decline thanks mainly to gains in U.S. stocks.
Notable gainers included Johnson & Johnson (NYSE:JNJ), Eli Lilly (NYSE:LLY), Merck (NYSE:MRK), and Bristol Myers (BMY), all of which have declared billions of dollars of investments to expand their U.S. manufacturing footprint.
In reaction, Citi argued that the announcement “lifts a significant overhang, as political uncertainties have kept investor interest at bay for most of this year.” As recently as August, Trump said that his administration is prepared to impose levies of up to 250% on pharmaceuticals, a significant step-up from the 200% pharma tariffs he indicated only a few weeks ago.
Analyst Geoff Meacham called the news a relief to biopharma investors, “given the preponderance of large caps in the sector have already announced significant investments since the major tariff announcement and will therefore not be impacted.”
“When this development is taken into consideration with the Fed’s rate lowering last week—which is posited to generate renewed interest in SMid biotechs—we now see a clearer path ahead again,” Bloomberg News reported, quoting Meacham.
Jefferies analyst Akash Tewari agreed: “We think this is a win for Pharma since several pharma companies are already investing in US manufacturing,” Tewari wrote.
Meanwhile, JPMorgan’s Chris Schott opined that the tariffs will not apply to a majority of pharmaceuticals imported to the U.S., as large-cap pharma companies have already begun or are currently increasing their U.S.-based manufacturing operations. Schott also argued that the group’s inventory buildups should lead to no or minimal exposure, “which gives companies time to start manufacturing buildouts, if they haven’t already.”
However, Edmund Ingham, Seeking Alpha Investing Group Leader for Haggerston BioHealth, sounded a neutral tone, noting that another major event awaits leading drugmakers later this month when a 60-day ultimatum imposed by Trump, forcing them to lower U.S. drug prices, is set to end.
“Big Pharma faces uncertainty as the Trump administration pushes MFN drug pricing and 100% tariffs on non-US manufactured patented medicines,” Ingham wrote with a Hold recommendation on PPH. “Investors should remain cautious: while policy volatility threatens valuations, long-term fundamentals and product innovation still drive sector resilience,” he added.