‘TARIFF TASKFORCE’: PHARMA FIRMS SCRAMBLE TO PREPARE EVEN AS TRUMP LEVIES RISK FLOUTING WTO RULES

Europe’s pharmaceutical firms are rushing to prepare for the potential fallout of U.S. import duties, with some forming “tariff taskforces,” even as analysts warn that levies on the sector could break global trade rules.

Fresenius Medical Care says that it has installed its first-ever “tariff taskforce” to manage uncertainty surrounding U.S. President Donald Trump’s proposed trade charges, with some production likely to be directly impacted.

“Clearly we’re looking at what happens to the tariffs in Europe and what also happens to tariffs [on] medical equipment,” CEO Helen Giza told CNBC’s “Squawk Box Europe” last week.

“The escalation and speed of this, with the executive orders, is something we assembled pretty quickly,” Giza said of the taskforce.

President Trump on Wednesday signaled that the European Union may be next to face sweeping 25% tariffs on its exports to the U.S., mirroring similar threats toward Canada and Mexico. It came a week after Trump said he was considering a flat charge of around 25% on all pharmaceutical, auto and chip imports.

The suggestion has prompted concern from some analysts, who say that such duties on the pharma industry would mark an infringement of rules set by the World Trade Organization — which counts the U.S. as a member.

According to the WTO’s 1994 Pharma Agreement, the majority of pharmaceutical products and the substances used to produce them are exempt from tariffs, binding them at duty-free levels. However, Diederik Stadig, sector economist at ING, said that provision might not be enough to prevent the White House leader’s plans.

“I do not think the WTO infringement would be enough to prompt an exemption from reciprocal tariffs,” Stadig told CNBC by email on Monday, dubbing the launch of tariff taskforces a “prudent business move.”

“It seems like the Trump administration doesn’t really care [if it breaks WTO rules],” Soren Lontoft, pharma equity analyst at Sydbank, told CNBC by phone on Friday.

A spokesperson for the White House did not immediately respond to CNBC’s request for comment on the possibility of a trade infringement. A spokesperson for the WTO Secretariat said that it “does not comment on the specific actions of our members, whether proposed or actual,” but added that participants could raise concerns about other member’s actions or initiate dispute settlement proceedings.

Tariff taskforces

The uncertainty around Trump’s proposals — and their feasibility — serves as a major headache for European firms.

European pharmaceutical companies would be among the hardest hit by sweeping tariffs on the sector. The U.S. consumed around $560 billion worth of pharmaceutical products in 2024, more than one third of which were imported, primarily from Ireland, Germany and Switzerland, according to ING calculations.

“These are the countries that are going to be hit particularly hard should the threat become a reality,” Stadig wrote in a note last month.

Germany’s Fresenius Medical Care said that tariffs would likely hit the group’s supply of dialysis machines and consumable products to the U.S., even as some of the company’s U.S.-based manufacturing remains insulated.

Alcon – CEO David Endicott said the Swiss-American pharmaceutical and medical device company was “paying very close attention” to levies. Despite seeing limited exposure on a direct, import-export level, Endicott pointed to potential concerns around the firm’s supply chains, including raw material imports.

“We don’t see a big exposure here, but it’s a dynamic time,” he told CNBC on Wednesday.

Brian McNamara, CEO of British multinational consumer healthcare company Haleon, meanwhile said Thursday that though much of the firm’s U.S. sales derive from domestic production, the business was “working through what the impact might be” of tariffs on one of its plants in Canada and several more in Europe.

One of the stated aims of Trump’s tariffs is to boost domestic U.S. manufacturing, by encouraging firms to locate their production. On Monday, Pfizer’s CEO suggested that the U.S. drug maker could move some of its overseas manufacturing to its U.S. plants to mitigate higher costs.

“If something happens, we will try to mitigate it by transferring from manufacturing sites outside to the manufacturing sites here,” Albert Bourla told TD Cowen’s annual healthcare conference.

Still, economists have questioned the logic of such a strategy and the ability of firms to ramp up capacity in the president’s desired timeframe.

“It will take time to build manufacturing plants and use idle manufacturing capacity,” Stadig said. “Second, the economies of scale for generic API [active pharmaceutical ingredients] production in India and China are so significant that even with a 25% tariff the production of generic APIs is not necessarily cheaper in the U.S. Third, it will prove difficult to quickly source raw materials.”

Meantime, others have warned that additional levies will only serve to push up prices in the already costly U.S. healthcare sector.

“Many companies have a global supply chain, so in one way or another it will hurt either the companies or the patients, or other members of the quite complex U.S. health care system,” Sydbank’s Lontoft said.

Source: CNBC

About STELLAPHARM

Stellapharm J.V. Co., Ltd. is currently known as one of leading generics pharmaceutical companies and strong manufacturers in Vietnam. Established in 2000, Stellapharm was built on the foundation of a manufacturing factory in Vietnam and formed a joint venture with a partner from Germany. We focus on both prescription drugs and non-prescription especially in cardiovascular diseases, anti-diabetics drugs, etc. Products of Stellapharm are now used by millions of patients in more than 50 countries worldwide.

The company is globally recognized for its quality through our facilities have been audited and approved by stringent authority like EMA, PMDA, Taiwan GMP, local WHO and others.

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