President Donald Trump reportedly issued a stringent warning to pharmaceutical companies, advising them to repatriate their manufacturing to the U.S. or face the possibility of tariffs.
What Happened: During a confidential meeting, Trump alerted drug companies about the impending tariffs, urging them to hasten the transfer of their overseas production to the U.S., reported Bloomberg on Friday.
On Thursday, the CEO of Eli Lilly & Co. LLY David Ricks, CEO of Merck & Co. MRK Robert Davis, CEO OF Pfizer Inc. PFE Albert Bourla, and Stephen Ubl, head of the industry’s largest lobbying group met Trump at the White House. The executives aimed to persuade Trump to back efforts to limit a law permitting the federal government to negotiate specific drug prices and to support measures targeting middlemen whom the industry holds responsible for increasing out-of-pocket costs.
As per the Bloomberg report, Trump did not assure to advocate with Congress to alleviate a drug pricing program established under former President Joe Biden‘s tenure, a relief that the pharmaceutical sector has been seeking.
Medicare officials confirmed on Friday that the next phase of the drug pricing negotiation program is due and would include Novo Nordisk‘s NVO blockbuster weight loss drugs, Ozempic and Wegovy.
Meanwhile, Trump stated that Health and Human Services Secretary Robert F. Kennedy Jr. and his nominee for leading Medicare and Medicaid, Mehmet Oz, are working to reduce drug prices.
Why It Matters: Last week, Trump proposed to impose a 25% tariff on pharmaceuticals imported to the U.S. This latest move by Trump is not surprising given his previous confrontations with the pharmaceutical industry. During his first term, he even accused them at one point of “getting away with murder” with their drug pricing.
ING Bank estimates that the U.S. imported nearly 36% of the drugs in 2024 with Ireland, Germany, and Switzerland being the top importers. Meanwhile, data from the Atlantic Council shows that U.S. imports of Chinese drugs surged 485% between 2020-2022. Following Trump’s latest warning to drugmakers to shift production in the U.S., Chinese biotech shares have taken a hit during their Asian trading session today. Shares of WuXi Biologics WXXWY, WuXi AppTec WUXAY and Pharmaron Beijing PHBBF witnessed significant declines.
That being said, ING asserted that Trump’s call for expanding U.S. pharmaceutical manufacturing is justified, as a report from the Biden administration had indicated that capacity restrictions were the cause of drug shortages. However, a 2022 report by Washington University revealed that the capacity expansion would take between two to three years.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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