EU pharma industry warns of ‘exodus’ to US amid Trump’s tariff threats

LONDON: Pharmaceutical companies in the European Union are expressing concerns about a potential “risk of exodus” to the United States as stock prices in the sector declined globally, following Donald Trump’s renewed threats to impose tariffs on US drug imports. On Wednesday, shares of drugmakers across Europe and India fell after Trump hinted at more punitive measures, following the implementation of 20 percent “reciprocal tariffs” on imports that began overnight.

The Stoxx 600 Health Care index, which tracks healthcare stocks in Europe, saw a significant drop of 5.9 percent for the day, continuing its decline that started when Trump first suggested tariffs in March. Notable losses included AstraZeneca, which dropped 7 percent, and the French pharmaceutical giant Sanofi, down 6.4 percent. Other companies like GSK and Swiss firms Novartis and Roche also saw declines of 5.71 percent and nearly 6 percent, respectively.

The situation in India mirrors these concerns, where companies such as Teva, major producers of various medications, could be affected by the tariffs. Trump announced new tariffs affecting goods from 57 countries, including a 20 percent levy on products from the EU, a 104 percent tariff on China, and 27 percent on Indian imports. While pharmaceuticals had previously been exempt from these levies, Trump indicated during a Republican event that he would soon introduce a significant tariff on drug imports.

Trump argued that this move would encourage drug manufacturers to relocate their operations to the US, although he has not specified the timing or extent of the tariffs. EU pharmaceutical firms have urged European Commission President Ursula von der Leyen to take swift and decisive action to address the “risk of exodus” to the US following discussions in Brussels.

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The European Federation of Pharmaceutical Industries and Associations (EFPIA), which includes major companies like Bayer, Novartis, and Pfizer among its members, met with von der Leyen just before Trump’s latest announcement. Their statement highlighted urgent concerns about potential capital flight to the US, which could threaten the pharma manufacturing hubs in Europe, particularly in countries like Ireland that exported €44 billion worth of pharmaceuticals to the US in 2024.

In his speech to Republican supporters, Trump emphasized his plans to impose tariffs, claiming that this would cause pharmaceutical companies to return to the US, which he described as the “big market.” Following Trump’s comments, the EFPIA issued their first communication addressing the threat of tariffs, cautioning that without rapid and transformative policy changes in Europe, pharmaceutical research, development, and manufacturing may increasingly shift to the US.

According to the EFPIA, there are substantial investments planned by pharmaceutical companies in the EU, totaling €164.8 billion from 2025 to 2029. However, a recent survey indicated that around 10 percent of these investments, approximately €16.5 billion, are now at risk. The association highlighted that the US is becoming a more attractive destination for investment, with tariffs potentially accelerating this shift, jeopardizing many jobs within the EU and UK pharmaceutical sectors.

The EFPIA report indicated that “the US now leads Europe on every investor metric,” including access to capital, intellectual property rights, approval processes, and incentives for innovation. In response to these concerns, the association presented von der Leyen with a five-point plan to enhance incentives for locating intellectual property in Europe and to establish a global framework to promote innovation and research within the region.