Jefferies discusses the potential impact of 100% tariffs on certain pharmaceuticals

Investing.com - Jefferies is assessing the impact of a potential 100% tariff on certain pharmaceutical products. Earlier reports indicated that the Trump administration was preparing to impose new tariffs on imported pharmaceuticals by launching an investigation under Section 232.

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Analyst Alok Dalal noted that, according to reports, these tariffs would apply to companies that have not reached an agreement with the White House, while imported products from countries with which trade agreements have already been negotiated would be subject to caps set under the terms of those agreements.

The government of U.S. President Donald Trump has not released an official statement yet, Jefferies said. The plan has not been finalized and could still change; certain drugs or disease categories may receive exemptions.

Jefferies believes that generic drugs may be exempt from tariffs. Dalal wrote: “Our baseline expectation remains that tariffs on generic drug companies (including those from India) will continue to be exempt.” He added that tariffs on generic drugs with thin gross margins could, through supply chain disruptions, lead to drug shortages.

Among Indian pharmaceutical companies, Jefferies believes Sun Pharma faces the greatest risk.

Innovative drugs account for 20% of Sun Pharma’s total revenue, and its key products are produced in South Korea, the European Union, or the United States.

Both South Korea and the European Union have reached 15% agreements with the United States on healthcare and pharmaceutical tariffs, so Jefferies concluded: “The highest tariff on Sun Pharma’s innovative products will be capped at 15%.”

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