Shares in European pharmaceutical companies have fallen to a four-month low after US President Donald Trump repeated his threat to impose tariffs on drug imports within the next week. Europe's Stoxx Health Care index slid by 2.8% on Wednesday to its lowest level since mid-April, shortly after Trump's initial 'liberation day' tariff announcements.
Trump told CNBC that he would initially impose a small tariff on pharmaceuticals, rising to 150% within 18 months and potentially 250%, in an effort to force companies to move production to the US. Medicines imported from the EU would face a 15% levy under the EU-US trade deal, a move condemned by the European pharmaceutical industry as a 'blunt instrument' that would harm patients on both sides of the Atlantic.
Bayer, the German maker of aspirin and allergy medicines, saw its shares slump by 9.9% after reporting a 5% drop in pre-tax profit for the first half of the year. Other European drugmakers also suffered: AstraZeneca lost 1.5%, GSK fell 1.7%, and Novo Nordisk declined 5.4% after warning of slower sales growth for its diabetes and obesity drugs Ozempic and Wegovy due to competition and tariff threats.
Investors are also nervous about White House pressure on drugmakers including Pfizer, AstraZeneca and GSK to cut prescription drug prices for Americans within 60 days. Meanwhile, the US Department of Health and Human Services, led by health secretary Robert F Kennedy Jr, announced on Tuesday it was winding down mRNA vaccine development under its biomedical research unit, terminating 22 federal contracts. This is not expected to affect AstraZeneca and GSK, which have limited mRNA work, but could hit Pfizer and Moderna.
Some companies are already responding to US calls for domestic investment. AstraZeneca announced a $50bn investment in July and said it would soon produce all its US-market drugs in the country. GSK reiterated plans to invest tens of billions of dollars in the US over the next five years, while Roche, Novartis, Johnson & Johnson and Eli Lilly are also expanding US manufacturing.
