EU Pharmaceutical Sector Faces Exodus Risk Amid Trump's Tariff Threats
Pharmaceutical companies in the European Union are sounding alarms over a possible exodus to the United States, as shares in the sector plummeted following former President Donald Trump's resurgence of threats to impose tariffs on drug imports. On Wednesday, stocks for drugmakers across Europe and India—a key hub for foreign pharmaceuticals—suffered significant declines. This downturn was triggered by Trump's indications of additional tariffs beyond the 20% reciprocal tariffs on imports that commenced overnight.
European healthcare stocks fell by 3.9%, hitting their lowest levels since October 2022 and leading to a 2.3% drop in the Stoxx 600 index. Major players like AstraZeneca, GSK, Roche, and Sanofi reported drops exceeding 5%, while in India, companies such as Teva, which manufactures a wide range of medications, also felt the negative impact.
Trump imposed fresh tariffs at midnight US Eastern Time, targeting imports from 57 countries and territories, including a 20% levy on goods from the EU's 27 member states, alongside even steeper tariffs on imports from China and India. Although pharmaceuticals had initially been exempt from these levies, Trump suggested at a National Republican Congressional Committee event that a significant tariff on drug imports would soon be introduced.
The former president claimed this move would encourage pharmaceutical companies to shift their operations back to the US, creating a sense of urgency among EU pharma firms. In response, the industry’s trade lobby, the European Federation of Pharmaceutical Industries and Associations (EFPIA)—which includes giants such as Bayer, Novartis, and Pfizer—has urged European Commission President Ursula von der Leyen to advocate for swift and substantial strategies to counteract the risk of losing investment to the US.
During a meeting in Brussels, EFPIA representatives expressed their concerns hours before Trump's recent tariff comments. The looming threat has intensified anxiety in key pharmaceutical manufacturing hubs across Europe, including Ireland, which exported approximately €44 billion of pharmaceuticals to the US in 2024, largely produced by American multinationals.
Trump reiterated his intention to repatriate pharmaceutical operations by stating, "Once we do that, they are going to come rushing back into our country because we are the big market." This sentiment raises significant concerns for the EU pharmaceutical industry, which has largely refrained from addressing the potential consequences of these tariffs since Trump’s ‘liberation day’ comments.
EFPIA's initial statement, titled "Pharma CEOs alert President von der Leyen to risk of exodus to the US," warned that without rapid and radical policy changes from Europe, pharmaceutical research, development, and manufacturing could increasingly shift to the US. A recent survey conducted by the association indicated that €164.8 billion is planned in capital expenditure by pharmaceutical companies in the EU between 2025 and 2029. However, over the next three months, approximately €16.5 billion—or 10% of the total planned investment—is at risk.
The association noted that the US is emerging as the preferred destination for investment due to the added pressure of tariffs, potentially jeopardizing hundreds of thousands of jobs in the EU. The US now surpasses Europe on all investor metrics, including access to capital, intellectual property, and rewards for innovation, creating a challenging landscape for EU pharmaceutical investments.
In light of this urgency, the EFPIA presented von der Leyen with a five-point plan aimed at enhancing incentives for locating intellectual property in Europe and pushing for a unified set of global rules designed to boost innovation and R&D initiatives within the EU. As these challenges intensify, the EU pharmaceutical sector finds itself at a critical juncture, needing to adapt rapidly to maintain its competitive edge against the allure of the US market.
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