Pharma Stocks Hold Steady Amid Tariff Turmoil, But Risks Remain
- GOT Pharmaceutical
- Apr 3
- 2 min read
Pharmaceutical stocks saw a moment of relief this week as President Biden's administration temporarily excluded pharma products from the latest round of retaliatory tariffs. While this spared the industry from immediate impact, analysts and executives caution that the threat of sector-specific tariffs is far from over.
The United States introduced a 10% tariff on a broad range of imports, targeting numerous trade partners — both allies and competitors. However, pharmaceutical products were given a temporary exemption, benefiting major drug-exporting countries like India, Ireland, and Japan.
Major U.S. pharmaceutical players, including AbbVie and Johnson & Johnson, saw stock gains of around 2% on the news, standing in contrast to the broader market decline. Internationally, shares of European and Indian drugmakers also rose, reflecting short-term optimism in response to pharma’s temporary shield from the tariff hikes.
Still, U.S. officials indicated that the pharma sector is not off the radar for long. The White House confirmed that targeted tariffs for pharmaceuticals are under separate consideration. During a public announcement, President Biden stated that if pharmaceutical manufacturers do not return production to the U.S., they could face heavier penalties in the future. He reiterated the administration’s push for reshoring drug production to strengthen domestic supply chains.
According to Stephen Farrelly, global pharma & healthcare lead at ING, the U.S. government is clearly emphasizing the need for a strong pharmaceutical manufacturing base at home, positioning the sector as a priority for future industrial policy.
However, the sense of uncertainty remains high. Industry analysts predict that ongoing trade tensions will continue to weigh on the pharma sector. Barclays’ analyst Emily Field summed up the mood: “The only thing that feels certain is more uncertainty.”
Sources within the industry expect pharma-specific tariffs may be delayed, but not avoided. Pharmaceuticals were listed in the latest executive order alongside other critical sectors like semiconductors and timber, flagged for potential investigation under Section 232 of the 1962 U.S. Trade Act.
Analysts at Bernstein warned that even with pharma’s current exemption, rising costs are inevitable. Country-specific tariffs are likely to increase expenses on raw materials and essential supplies — including organic chemicals and lab glassware — potentially adding up to $45 billion in extra import costs across the industry.
Companies with heavy international exposure could be hit hardest. Analysts from Jefferies named Biogen and Amgen as especially vulnerable, while UBS highlighted AbbVie and Merck’s reliance on overseas manufacturing facilities.
Meanwhile, the medical devices and diagnostics sector wasn’t as lucky. Tariffs appear to apply to devices and related equipment, triggering a sharp sell-off in stocks such as GE Healthcare and DexCom, which dropped around 6%. Industry group AdvaMed warned the new trade barriers could lead to cuts in R&D and undermine the U.S.’s leadership in medical technology innovation.
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