European pharmaceutical shares sank to a four-month low on Wednesday after Donald Trump repeated his threat to impose tariffs on drug imports "within the next week or so". The Stoxx Health Care index fell 2.8%, its weakest level since mid-April, as investors reacted to the US president's latest comments on levies designed to bring drug manufacturing back to America.
Trump told CNBC that an initial small tariff on pharmaceuticals would rise to 150% within 18 months and eventually to 250%, as he seeks to force companies to relocate production. Under the terms of an EU-US trade deal, medicines imported from the EU would face a 15% levy, a move described by the European pharmaceutical industry as a "blunt instrument" that would harm patients on both sides of the Atlantic.
Shares in German group Bayer fell 9.9%, the biggest decliner in the sector, after it reported a 5% drop in pre-tax profit (excluding one-off items) for the first half of the year. Novo Nordisk also lost 5.4% after the Danish company said sales growth of its diabetes and obesity drugs, including Ozempic and Wegovy, had slowed sharply amid competition and tariff worries.
Adding to investor jitters, the White House is demanding that drugmakers including Pfizer, AstraZeneca and GSK cut prescription drug prices for Americans within 60 days. Separately, the US Department of Health and Human Services, led by Robert F Kennedy Jr, said it was terminating 22 federal contracts for mRNA-based vaccines, a decision expected to hit Pfizer and Moderna but not the British groups, which have minimal mRNA work. GSK said it had no such contracts; AstraZeneca confirmed it had one for an early-stage RNA-based pandemic influenza vaccine and was reviewing its options.
Some companies are already responding to US pressure. AstraZeneca, Britain's most valuable company, announced a $50bn investment in the US in July and said it would soon be able to produce all its drugs for the American market there. Chief executive Pascal Soriot praised the US for spending 0.8% of GDP on pharmaceutical innovation and called on Europe and the UK to match that level, up from 0.3%. GSK chief executive Emma Walmsley said the threat of tariffs had not dented the company's outlook and reiterated plans to invest "tens of billions of dollars in the US over the next five years".
Other drugmakers, including Roche, Novartis, Johnson & Johnson and Eli Lilly, are also investing in US manufacturing. In London, AstraZeneca shares lost 1.5% on Wednesday while GSK fell 1.7%. In New York, Pfizer and Moderna were both down 3%.
