Novartis, Roche could be at greater risk

President Donald Trump is scheduled to impose tariffs on pharmaceutical products imported to the US. At any time, and duties may have a greater impact on some medication manufacturers than others, according to some analysts.

Trump told journalists earlier this month that his administration will begin to implement low pharmaceutical levies as soon as August 1 and increase the rate in approximately one year or 18 months. He has threatened to impose up to 200% of imported drug tariffs.

It is not yet clear if it will continue with that exact plan and rate, which makes it difficult to evaluate how policy will affect medication and patient manufacturers. National drug manufacturing operations are also growing, since several companies have recently announced multimillion -dollar investments in new facilities to build goodwill with the president, but it will probably spend several years before those sites are in operation.

Some analysts have estimated the potential tariff risk for different companies based on their current manufacturing networks, among other factors.

Abbot, Bristol Myers Squibb and Eli Lilly They seem “relatively well positioned” because their manufacturing traces in the United States are larger than operations abroad, while Novartis and Roche Look at more at risk, said TD Cowen Steve Scala analyst in a note on Monday.

In a note in March, Jefferies analyst Michael Yee also called Amgen and Biogen how to have the greatest exposure to tariffs among biotechnology companies that it covers. Head and Pharmaceutical vertices He will probably be less exposed, he said.

But Biogen in May clarified during his first quarter of profits in May that he expects a minimum exposure to Trump's rates, even if pharmaceutical specific levies are implemented. This is because a significant proportion of their US income is of products that have manufacturing operations in the country, and also due to the company's current global inventory positions.

Scala said tariffs will probably receive a significant bite of the free cash flow of companies for at least the first two years after they are implemented. He said that is based on a conversation with an unidentified expert, which is the old CFO of a pharmaceutical company.

This expert believes that medication manufacturers can increase medication prices, but increase them enough to completely compensate tariffs “will be politically unsustainable” since patients already have problems providing drugs, Scala said. He said that medication manufacturers can also move to cut out research and development spending, but added that the expert said the main cuts are unlikely since innovation is key to the long -term growth of each company.

The expert believes that pharmaceutical rates of more than 50% would be “problematic and punitive for the industry,” Scala added.

“In this scenario, companies would have to be very aggressive as manufacturing manufacturing to the United States and substantial cuts to R&D would not be out of discussion,” said Scala.

In recent months, some pharmaceutical CEOs have criticized tariffs on imported medications, saying that they will harm R&D and that could lead to less treatments for patients. Some health policy experts also previously told CNBC that the levies could interrupt the complex pharmaceutical supply chain, which potentially increases the prices of medicines in the US. UU. And exacerbats the shortage of critical medicine.

In a statement, Roche said he has a “robust presence” in the United States that includes 15 research and development sites and 14 manufacturing facilities. The company also pointed out its recently announced plans to invest $ 50 billion in the US.

Roche said he believes that pharmaceutical products and diagnoses should be exempt from tariffs to “protect access to the patient, supply chains and, ultimately, future innovation.” But the company said it is prepared for possible levies and trusts its ability to manage any impact and ensure that access to its products is not interrupted, which indicates mitigation efforts such as inventory adjustments.

The spokesmen of the other analyst companies mentioned as most tariffs did not immediately respond to comments requests.

Drug Companies have vast manufacturing networks, obtain active pharmaceutical ingredients from multiple sources and have complex intellectual property patents, Scala said in a separate note in April. He said that leads to tax strategies and equally complicated prices.

Scala said that much of that information is not publicly available, “making the analysis of the rates difficult, to say the least.”

But he estimated which companies seem to be in a better or worse position for climate tariffs based on key metrics, including the number and location of manufacturing plants, the use of such facilities, the source of active ingredients and the location of patents.

Scala said Abbvie, Astrazeneca, Eli Lilly, Merck and Pfizer Have larger American manufacturing networks, with 10 main plants each.

But Abbvie, Bristol Myers Squibb and Eli Lilly are the only companies with important important plants in the United States than abroad, he said. Abbvie and Eli Lilly have nine of those facilities abroad, while Bristol Myers Squibb has two.

These three companies also have the highest percentage of sites registered in the Food and Medicines Administration of the United States for the manufacture of active pharmaceutical ingredients in the United States, while Daiichi Sankyo, Novartis and Zoetí have the least. Roche and Novo Nordisk They also have a low percentage of active ingredients sites in the United States in relation to the rest of the world, according to the note.

GSK It has the largest drug manufacturing network abroad, with 31 main plants revealed. But the company has said that it plans to close several of those facilities, said Scala.

Other companies with large manufacturing traces abroad include Pfizer with 27 plants, Healthy With 16, zoetis with 14 and Elanco with 11. Some drug manufacturers, including Merck, Roche and TakondaThey have not revealed how many significant plants have outside the United States, according to the note.

He said that Ireland is a factor to consider, since it seems to be a particular objective for tariffs. Trump has repeatedly pointed to Ireland for “attracting” American drug manufacturers with decades of low corporate tax rates.

Abbvie and Merck have the most registered drug manufacturing sites in the FDA in Ireland. These facilities manufacture pharmaceutical products distributed or imported to the US.

Some drug manufacturers, including GSK, Novartis and Roche, do not have Irish manufacturing sites recorded in the FDA.

Yee de Jefferies highlighted Amgen and Biogen as companies at risk due to their international tax advantages. He said Amgen has manufacturing operations in Ireland and Singapore, which reduces the amount of taxes he pays by 6%.

The important biogen manufacturing operations are found in North Carolina and Switzerland. Yee said the company obtains an 8% tax exemption thanks to how its profits are taxed abroad.

In comparison, VERTEX and GILEAD are less likely to benefit from those international tax advantages, Yee said. Vertex manufactures its medications in Boston.

He added that, although Gilead has a manufacturing presence in Ireland, he mainly produces his drugs in California and sells many of his HIV drugs in the United States.

When TD Cowen Scala asked companies how they could mitigate tariff cost increases, several potential options pointed out. That includes exploring alternative sources of active ingredients outside of Europe, or exploring alternative contract options in non -European locations, such as the territory of the United States, Puerto Rico.