MW Pharma stocks gain, as Trump's tariff move actually could be a win for the sector

By Victor Reklaitis

'We expect this will be viewed neutrally, if not slightly positively,' one team of analysts says

U.S. President Donald Trump announced a new tariff plan for drugmakers late Thursday. He's shown here during his first presidential term taking part in a July 2020 event focused on drug prices.

Pharmaceutical stocks mostly gained Friday, as traders appeared to shrug off or even cheer President Donald Trump's rollout of a new tariff plan for drugmakers.

Late Thursday, Trump said in a social-media post that his administration on Wednesday will start imposing a 100% tariff on any branded or patented pharmaceutical product unless its manufacturer is breaking ground on a U.S. plant or has one under construction.

See: Trump announces 100% tariffs on pharmaceuticals unless drug makers are building U.S. factories

In the wake of that announcement, pharma stocks - as tracked by the VanEck Pharmaceutical ETF PPH - were trading higher by about 0.6%. Other drugmaker exchange-traded funds PJP XPH were also advancing Friday.

Drug companies "have used the past six months to prepare for this moment" through their "pulling forward of inventories manufactured overseas and the steady cadence of U.S. manufacturing infrastructure announcements," analysts at Cantor said in a note.

"With that context, we expect this will be viewed neutrally, if not slightly positively as evidence of de-escalating the fight on tariffs," the analysts wrote. They also said it's "challenging to determine" if there are companies that don't qualify for an exemption, even as the announcement provides the Trump White House with headlines about "being tough on Pharma and promoting domestic jobs."

In a similar vein, analysts at Citi said Trump's announcement is "likely to come as a relief" to many pharma investors, given that the majority of big players in the sector have already announced significant investments in the past six months and "will therefore not be impacted."

"In our view, this lifts a significant overhang, as political uncertainties have kept investor interest at bay for most of this year," the Citi team said in a note.

The Cantor chart below shows the wide range of drug companies that recently have announced investments in new U.S. facilities.

Another key factor, according to TD Cowen analyst Chris Krueger, is that roughly 90% of prescriptions in the U.S. are filled using generic drugs, which were not targeted by Trump's announcement. In addition, Krueger said trade deals with Japan and the European Union have capped U.S. tariffs at 15% and promised that future tariffs won't stack on top of that level, although he added that the agreements are "not legally binding, so confusion remains the coin of the realm with clarity in short supply."

Some European and Asian drug stocks lost ground Friday. Denmark's Novo Nordisk (NVO), which has a major plant in North Carolina, was down about 1%. Japan's Chugai Pharmaceutical (JP:4519) shed 5%, JD Health (HK:6618) in Hong Kong dropped 4%, and shares of South Korea's SK Biopharmaceuticals (KR:326030) fell 3.5%.

The Pharmaceutical Research and Manufacturers of America, also known as PhRMA, didn't immediately respond to a request for comment. A PhRMA spokesman told the Wall Street Journal that "most innovative medicines prescribed in America are already made in America," but added that "every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures."

Tomi Kilgore, Barbara Kollmeyer and Mike Murphy contributed.

-Victor Reklaitis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 26, 2025 13:05 ET (17:05 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.