Tariff Threats Loom Over Pharmaceutical Giants Amid Trade War

The ongoing U.S. tariff threats pose risks to major pharmaceutical stocks including Pfizer, Amgen, and AbbVie due to potential import costs. Investors should brace for the impact on profit margins and stock performance.

Date: 24-05-2025

AI Rating: 5

Impact of Tariffs on Pharmaceutical Stocks - The report highlights an increasing concern over U.S. tariffs on pharmaceuticals and drug components, particularly affecting companies like Amgen, Pfizer, and AbbVie. All three could face rising import costs due to tariffs, which directly impact profit margins and stock valuations.

Amgen (AMGN) is particularly exposed due to its reliance on manufacturing operations outside the U.S., mostly in Ireland and Singapore. This dependence complicates their cost structure, as higher import tariffs could lead to a squeeze on profit margins. Analysts note that Amgen has relatively thin profit margins, making it susceptible to fluctuations in cost.

Pfizer (PFE) shares a similar fate, with significant production of their top-selling drugs happening in Ireland and Germany. The anticipated tariffs are concerning as they would add substantial operational costs for Pfizer, whose top drugs represent 10% of total revenue. Additionally, the company's recent $43 billion acquisition adds pressure to their already stretched finances, making added tariff costs less manageable.

AbbVie (ABBV) is less worried about immediate tariff impacts; however, analysts have flagged the potential long-term consequences. With key products such as Rinvoq and Humira being manufactured outside the U.S., AbbVie’s ability to maintain its profit margins could be at risk. The company has earmarked significant funds ($10 billion) for expanding U.S. manufacturing, highlighting both an understanding of the risk and a proactive approach to mitigate future challenges.

Overall, the uncertain trajectory of trade negotiations and tariff implementations creates a volatile environment for these pharmaceutical stocks. Investors should be cautious, particularly since these companies could face heightened operational costs while trying to maintain competitive pricing in the market.

Stocks: AMGN PFE ABBV