IG/HY Healthcare: Readying for Pharma Tariffs
Eric Axon, CFA - Co-Head of High Yield, Head of Healthcare, CreditSights
Patrick Cunniff - Analyst, Healthcare, CreditSights
15 April 2025
Trump has repeatedly teased the announcement of sector-specific tariffs for pharma, representing a major shift for a sector that has historically been exempt from such action. We offer thoughts on how to think about potential exposure.
The pharma sector is heavily dependent on overseas drug manufacturing, particularly from Europe. The sector is also reliant on sourcing active pharmaceutical ingredients (API) from abroad. At the company level, one way we gauge pharma exposure to tariffs is by comparing US-based revenues to global manufacturing footprint.
It seems that onshoring drug manufacturing is a strong motivation for Trump. Thus far, his tactics appear to be working as a number of companies have announced plans to invest big dollars in US manufacturing in recent weeks/months.
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