While President Trump announced Thursday evening 100% tariffs on branded and patented drugs imported into the US starting Oct. 1, JP Morgan doesn’t see it having a huge impact on the pharmaceutical sector.
The investment bank noted that most large pharmaceutical companies should be largely unaffected since they have recently announced plans to increase manufacturing facilities in the US. Companies that are building new plants, per Trump’s Truth Social post, will be exempt from the tariffs.
In a note, JP Morgan analysts said that while details are limited, “we note that this will likely lead to a majority of pharma products being excluded from any tariffs.”
Leerink’s David Risinger agreed, though the situation is more unclear for smaller pharmas. “Many large-cap biopharmaceutical companies should not be exposed because they are engaged in some sort of U.S. facility construction activity, but it is difficult to predict which smaller U.S. biopharma companies may face exposure.”
Countries that have existing trade deals with the US are also exempt from the pharma tariffs.
In response to Trump’s previous threats of pharma tariffs and his “most favored nation” (MFN) program to bring US drug prices in line with other parts of the world, Johnson & Johnson (NYSE:JNJ), Bristol Myers Squibb (NYSE:BMY), Eli Lilly (NYSE:LLY), AstraZeneca (NASDAQ:AZN), Roche (OTCQX:RHHBY), Novartis (NYSE:NVS), and Regeneron Pharmaceuticals (NASDAQ:REGN) have announced multi-billion-dollar US manufacturing investments. Earlier Friday, Amgen (NASDAQ:AMGN) announced a $650M expansion of its domestic manufacturing program.
Speaking on CNBC’s “The Exchange” on Friday, Bernstein US Biopharma Senior Analyst Courtney Breen said that in 2024, about $214B worth of pharmaceutical products were imported into the US, adding that Europe is responsible for about 60% of those imports.
She added that Sept. 29 is the Trump administration’s self-imposed deadline for drug companies to lower drug prices in the US per the president’s MFN policy.
“Now that we’ve had tariffs roll off, it is much more likely we get pricing news…because tariffs have been deleveraged….On drug pricing, there are much more narrow paths for the administration to enact on the industry compared to what they could do on tariffs,” Breen said.
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