Pharma stocks slide after Trump signals tariffs on sector

Investing.com -- Shares in major U.S. and European pharmaceutical companies fell sharply Wednesday, underperforming a broader market downturn, after U.S. President Donald Trump said the country would soon impose “a major tariff on pharmaceuticals” soon.

In U.S. premarket trading, stocks of large drugmakers tumbled, with Pfizer (NYSE: PFE) and AbbVie (NYSE: ABBV) falling 3.8% and 5.7%, respectively, Merck&Company Inc (NYSE: MRK) off 4.5%, and Amgen (NASDAQ: AMGN) and Gilead (NASDAQ: GILD) losing over 4% each.

Other names, including Bristol-Myers Squibb Company (NYSE: BMY), Biogen (NASDAQ: BIIB), Eli Lilly (NYSE: LLY), Vertex Pharmaceuticals (NASDAQ: VRTX), Moderna (NASDAQ: MRNA), and Johnson&Johnson (NYSE: JNJ), also posted declines ranging from 2% to 5%.

In Europe, the Stoxx 600 Health Care Index plunged as much as 6.2%, hitting its lowest level since October 2022 and lagging behind the broader market.

Heavyweights such as Novartis (SIX: NOVN), Sanofi (NASDAQ: SNY), GSK plc (LON: GSK), Novo Nordisk (NYSE: NVO), AstraZeneca (NASDAQ: AZN), and Roche Holding AG (OTC: RHHVF) Participation (SIX: ROG) all saw losses.

BMO Capital Markets analyst Evan David Seigerman said Trump’s remarks shattered the “illusion of safety” around the sector, which had been “notably absent” from last week’s initial list of tariffs.

“While the details are scant, we strongly opposed to tariffs on any pharmaceuticals--these will likely do little to shift manufacturing back to the U.S., as we already have robust biomanufacturing and fill finish onshore,” noted.

He also doesn’t expect the industry to implement any “major” changes, citing the complex nature of pharmaceutical supply chains.

“These current tariffs are being pursued under emergency powers, which at worse last until the end of the current administration and could end sooner with an act of Congress,” the analyst continued.

The broader market also looks set to open lower on Wednesday, with the S&P 500 futures sliding 1.5% as of 08:59 ET.

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