Trump Hints At 'Major Tariff' On Imported Pharmaceuticals, US Pharma Stocks Tumble In Wednesday Pre-Market - AstraZeneca (NASDAQ:AZN), Amgen (NASDAQ:AMGN)

President Donald Trump has declared that his administration is on the brink of imposing a significant tariff on pharmaceuticals imported from foreign countries.

What Happened: President Trump, on Tuesday, disclosed plans for a “major tariff” on foreign pharmaceuticals. Trump is hopeful that this move will prompt drug companies to shift their operations to the U.S., reported The Guardian.

“We’re going to be announcing very shortly a major tariff on pharmaceuticals… when they hear that they will leave China, they will leave other places because… most of their product is sold here,” Trump expressed at a National Republican Congressional Committee dinner.

Despite exempting pharmaceuticals from the recent round of reciprocal tariffs, Trump has been hinting for a long time that the drug industry would be a target. The President is of the view that the tariff will drive drug companies to return to the U.S., considering it is a significant market for their products. “The advantage we have over everybody is that we’re the big market. So we’re going to be announcing very shortly a major tariff on pharmaceuticals,” Trump added.

The President, however, did not divulge any specifics regarding the tariff increase or its potential impact.

Pharmaceutical stocks across the globe, including GlaxoSmithKline, Sanofi and India’s Teva Pharmaceuticals, tumbled on Wednesday.

In the U.S. pharmaceutical stocks, Pfizer PFE declined 3.5%, while Eli Lilly And Co. LLY lost 3.2%. AstraZeneca Plc AZN fell 1.35%, while Amgen Inc. AMGN and Merck & Co. Inc. MRK dropped 2.94% and 2.75%, respectively, during the Wednesday pre-market trading session.

Why It Matters: The $1.7 trillion revenue prescription drug industry has demonstrated a strong resilience to tariffs. The U.S., being the largest and most profitable market globally for prescription drugs and generic products, imports most of these from overseas. In 2024, drug imports reached $213 billion, more than two and a half times the total 10 years earlier. The proposed tariff could, in theory, help bring business back onshore.

However, companies like AstraZeneca Plc and Pfizer have extensive global manufacturing networks, including Ireland, Germany, Canada, the UK, and the U.S and are not restricted to India and China. Sources told Reuters that it could take up to 10 years to build and equip a factory in the U.S., due to stringent regulatory requirements from the U.S. Food and Drug Administration (FDA). Therefore, Trump’s tariff might necessitate drugmakers to overhaul a complex, expensive manufacturing system.

Meanwhile, after Trump indicated major tariffs on pharmaceuticals, EU drugmakers have urged European Commission President Ursula von der Leyen to take "rapid and radical action" to address the growing "risk of an exodus" to the U.S., following a meeting in Brussels.