Drugmakers' stocks in Europe and India dropped on Wednesday after U.S. President Donald Trump reiterated plans for a "major" tariff on all pharmaceutical imports and as his "reciprocal" tariffs took effect, leading to a further carnage in global markets.
A basket of European healthcare stocks (.SXDP) fell 4.6% at 0852 GMT to its lowest since October 2022, leading losses among sectoral indexes on the region-wide STOXX 600 (.STOXX), which was down 3%.
Shares of AstraZeneca (AZN.L), GSK (GSK.L), Roche (ROG.S), Sanofi (SASY.PA), and Novartis (NOVN.S) fell between 5% and 6.5% in Europe.
Trump has not said when and by how much he plans to raise taxes on pharma imports.
The U.S. president has said that the tariffs will incentivize drug companies to move their operations to the U.S. However, analysts and companies have raised concerns about the difficulty in setting up manufacturing in the U.S.
EU medical and pharmaceutical product exports to the U.S. totalled about 90 billion euros ($97 billion) in 2023, according to the latest Eurostat data.
Barclays analysts said in a note to clients last week that potential implementation of tariffs on the industry would be extremely difficult, given globalised manufacturing, interwoven supply chains, as well as potential adverse effects on patients in the United States.
The analysts also pointed to Europe accounting for about 80% of U.S. trade deficit in biopharma.
They highlighted companies with high share of U.S. revenue or limited U.S. manufacturing sites as potentially more affected, such as Argenx (ARGX.BR), UCB (UCB.BR), or Novo Nordisk (NOVOb.CO).
In contrast, companies like AstraZeneca, Roche and Sanofi could be more immune given their diverse global manufacturing network and increasing manufacturing capabilities in the U.S., they said.
Indian pharmaceutical stocks (.NIPHARM) fell 1.9%, dragging down the benchmark Nifty 50 (.NSEI) by about 0.6%.
Trump had also threatened the duties on Friday, after his first set of "reciprocal" tariffs announced last week exempted pharma products -- a change in stance that had prompted a wild swing in pharma stocks.
"This is playing a lot on investors' sentiment and is an overhang until the time when announcement of the tariffs happens," said Shrikant Alkokar, equity analyst at Mumbai-based Nuvama Group.
IPCA Laboratories (IPCA.NS), Glenmark Pharma (GLEN.NS) and Biocon (BION.NS) were the top losers by percentage on the pharma index in Mumbai, down between 4% and 6.5%.
India's pharma exports to the U.S. mostly comprise generics, or cheaper versions of popular drugs. The U.S. accounts for a third of India's overall pharma exports.
