SINGAPORE/SHANGHAI, Sept 26 — Shares of pharmaceutical companies across Asia fell on Friday after US President Donald Trump unveiled 100 per cent tariffs on imports of branded drugs from October 1, unless their producers had already broken ground on US manufacturing plants.
Markets had already been braced for tariffs on pharmaceutical products that Trump had long foreshadowed, but companies with big exposure to the US market took a heavy hit, with Japan’s Sumitomo Pharma tumbling 4.3 per cent and Australia’s CSL plummeting to a six-year low.
Lorraine Tan, director of equity research for Asia at Morningstar, said the final tariff rate should be lower given the pattern of negotiations so far, but the uncertainty in the near term could weigh on share prices.
Other analysts expected only a limited impact on Asian drugmakers, as many focus on generic drugs.
“This is branded drugs — it doesn’t affect generics that China and India supplies,” said Ken Peng, head of Asia investment strategy at Citi Wealth.
“The recent growth in Chinese healthcare is based on selling IP to US and European pharma. The region that exports the most branded, finished product to the US is Europe, Switzerland, and maybe a little bit in Japan.”
The EU has a trade deal with the US to pay a 15 per cent tariff on goods, including pharmaceuticals, while Japan has an agreement that its tariff rates will not exceed others, including the EU, Tokyo’s trade negotiator said on Friday.
US investment rush
Around 60 per cent of US pharma imports in 2024 came from the European Union, according to UN Comtrade data. Switzerland, which is not an EU member, was the second-biggest exporter at 9 per cent.
Many global drugmakers have already announced multi-billion-dollar investment plans in the US this year to mitigate the impact of threatened tariffs on pharmaceutical imports.
They include AstraZeneca, Roche, Eli Lilly & Co, Johnson & Johnson, Novartis and Sanofi.
A source at a Taiwan-based pharmaceutical company that makes branded drugs said it could take at least five years to build and certify a new US plant, without taking into account any supply chain or labour shortage issues.
“At least it’s a global tariff and not country specific, so that levels the playing field to some extent... Ultimately, the biggest losers could be people who need medicine,” the source said.
Asian shares down
In Japan, Otsuka Holdings dropped 3.5 per cent, and Daiichi Sankyo lost 1.6 per cent, although Takeda Pharmaceutical added 0.2 per cent and Shionogi gained 1.3 per cent.
Takeda's biggest manufacturing presence globally is in the US, its chief executive officer Christophe Weber said in July.
Japan exported US$2.5 billion of pharmaceutical products to the US in 2024, according to UN Comtrade data.
Hong Kong’s Hang Seng Biotech Index was down about 1.4 per cent.
“The market is calling (Trump’s) bluff,” said Citi Wealth’s Peng.
“We see some Asian pharma names down pretty significantly today, but if people really believe that large swathes of branded pharma will be tariffed at 100 per cent, it wouldn’t be a 3 per cent correction.”
India’s pharmaceutical stock index fell 2.6 per cent, with declines among all 20 members, even though its industry is dominated by generic drugs excluded from the tariffs. Heavyweight Sun Pharmaceutical Industries was down 3.4 per cent.
In Australia, Health Minister Mark Butler told reporters the government was working to understand the implications of the new “unfair, unjustified tariffs after 20 years of free trade.”
The country’s healthcare companies exported around A$2.1 billion (US$1.37 billion) in medicines and pharmaceuticals to the US last year.
CSL, the country’s largest biotechnology company, fell 2 per cent in the afternoon after dropping by as much as 5 per cent in early trade.
CSL said it did not expect any material impact from the tariffs, given its “very significant manufacturing footprint” in the US
