Big Pharma Stocks Dive Amid Trade War Jitters & Inflation Woes

Stocks of several large-cap pharmaceutical companies plummeted on Friday after China hit back with retaliatory tariffs of 34% on all U.S. imports, escalating fears of a global recession. This move comes just two days after Trump announced his ‘Liberation Day’ speech.

Though Trump is yet to impose tariffs on imports of medicines and active pharmaceutical ingredients (API), China decided to impose an additional 34% tariff on all U.S.-originated goods, effective April 10. Investors were concerned that China’s response could lead to Trump imposing significant duties across all Chinese goods, adding pharmaceuticals to the list as well. This could significantly drive up drug prices for U.S. consumers as big pharma relies more on overseas manufacturing.

Stocks That Fell Following the News

Shares of all major large-cap pharma and biotech giants took a hit. AbbVie ABBV, Amgen AMGN, Merck MRK and Pfizer PFE lost 7.3%, 5.0%, 5.7% and 5.4%, respectively.

Shares of Eli Lilly LLY and Novo Nordisk also declined 6.5% and 6.8%, respectively, but primarily due to reports that the Trump administration did not expand Medicare coverage for weight-loss drugs. Shares of other large drugmakers, such as J&J JNJ and AstraZeneca, also fell 4.1% and 7.4%, respectively.

The blowback was not just limited to pharma stocks. The harsh retaliatory tariffs saw a bloodbath on Wall Street, with all three major indexes recording one of their worst declines. The S&P 500 declined 6%, while the Dow tumbled 5.5%. The tech-heavy Nasdaq registered a fall of 5.8%.

How Tariffs Threaten the Pharma Industry

Although Trump’s tariff policy aims to increase U.S. investments and boost domestic production, it is also increasing the likelihood of a global trade war. Higher costs will affect drugmakers’ profit margins. Companies making generic and biosimilar products, which already operate on thin profit margins, will be more severely impacted.

Some countries that export drugs or APIs to the United States may avoid the American market altogether, creating supply shortages and hurting the global supply chain.

While companies like J&J and Eli Lilly have earmarked significant funds to expand their U.S.-based manufacturing capabilities, establishing infrastructure will take time, making near-term disruption almost inevitable.

More Troubles for Pharma Stocks?

Adding to the industry’s headwinds, biotech and pharma stocks are also feeling the pressure from internal regulatory uncertainty. The resignation of Dr. Peter Marks, a senior FDA official instrumental in driving biotech innovation, has raised alarms across the sector. His departure reportedly stems from growing tensions with the newly appointed secretary of Health and Human Services (HHS), Robert F. Kennedy Jr.

Trump’s appointment of RFK Jr. — a well-known vaccine skeptic — as HHS head has drawn criticism from across the medical and investment communities. Concerns are mounting that his views could influence public health policy in ways that conflict with the established scientific consensus. Dr. Marks’ exit only amplifies those concerns, with questions swirling around the FDA’s ability to maintain momentum on innovation and regulatory clarity.

Per a recent Forbes article, RFK Jr. is also pushing for a nationwide ban on direct-to-consumer pharmaceutical advertising — a move which, if enacted, could significantly reshape how healthcare products are marketed and perceived in the United States.

Zacks Rank

AbbVie, Amgen, Eli Lilly, J&J, Merck and Pfizer carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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