New drug tariffs "much ado about nothing"? UBS: Major pharmaceutical companies have already invested hundreds of billions of dollars in the US and may receive full exemptions.

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After Trump announced on Thursday night a 100% tariff on imported pharmaceuticals, investment banks including UBS told clients that the actual impact of this policy may be negligible. Analysts pointed out that since major pharmaceutical companies have already invested tens of billions of dollars in building production facilities in the United States, most companies can obtain tariff exemptions.

According to CCTV News reports, on September 25 local time, US President Trump announced on his social media platform "Truth Social" that starting October 1, the United States will implement a new round of high tariffs on many categories of imported products, including a 100% tariff on patented and branded pharmaceuticals.

According to Trump's statements on social media, the 100% tariff on "any branded or patented drug" will take effect from October 1, but companies building pharmaceutical manufacturing plants in the US can be exempted. This exemption clause is defined as "breaking ground" or "under construction," so as long as construction has started, the tariff does not apply.

Asian stock markets fell on Friday due to the tariff news, with Asian pharmaceutical stocks declining. However, large European pharmaceutical stocks remained relatively stable following Trump's overnight announcement of the drug import tariffs.

The market generally believes that, given major pharmaceutical companies' existing large-scale US production layout, the practical impact of the new tariff policy is limited. Analysts expect this policy is more symbolic, aiming to promote the pharmaceutical industry’s return to the US, rather than truly attack imported pharmaceutical trade. According to Bloomberg economists, the countries most affected by this action are Singapore and Switzerland. The UK also has significant pharmaceutical exports to the US—its trade agreement with the US mentions that if a new Section 232 tariff arises, a special tax rate will be considered, but no formal rate agreement has been reached. Japan appears to have a similar arrangement.

Major pharmaceutical companies have invested tens of billions of dollars; the impact may be negligible

UBS analyst Joe Dickinson stated in a research report that, considering the huge investments major pharmaceutical companies have committed over the next five years, market expectations for the practical impact of a 100% product tariff may remain low.

Specific investment data shows AstraZeneca has pledged $50 billion, Roche $50 billion, GlaxoSmithKline $30 billion, Novartis $23 billion, UCB $2 billion, and Sanofi $20 billion.

Vontobel analyst Sibylle Bischofberger Frick pointed out:

All major pharmaceutical companies have a business presence in the United States, and almost all have announced large-scale investment plans for the coming years.

Mizuho Securities healthcare expert Jared Holz said in a report that the statement is direct, but its impact may range between unclear and negligible. All major players have some manufacturing operations in the US, and nearly all companies have announced increased investments directly related to local manufacturing.

According to data from the Biotechnology Innovation Organization, nearly 90% of U.S. biotechnology companies rely on imported components for at least half of their approved products, highlighting the complexity and interconnectedness of the global pharmaceutical supply chain.

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