ING THINK
Loading…
FX BANK FORECAST · COVERAGE
Institutional FX coverage in your inbox
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 32 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 32 institutional desks. No promotion.
The desk's interpretation centers on the shifting landscape of pharmaceutical tariffs and its implications for global investment, particularly in the US. Per the full note source, recent adjustments have introduced a layered tariff regime, which, while clarifying the overall picture, still leaves room for bilateral negotiations and potential reclassifications that could impact market dynamics. The significant investments by Swiss and European firms in the US pharmaceuticals, driven by preferential tariff treatment, highlight an emerging trend of ‘America First’ in the pharma landscape. This move could strengthen the dollar against the euro amid speculation surrounding future tariff measures.
The current environment around pharmaceutical tariffs indicates a deliberate shift in investment to the United States, as evidenced by recent moves from the Trump administration. The layered approach combining Section 232 and Section 301 tariffs allows selected nations like Switzerland and Japan favorable treatment, capping their duties and incentivizing local investments. Diederik Stadig's analysis suggests that as the US represents over 50% of branded pharma revenues and higher profit margins, this trend will likely continue, presenting a substantial shift in global production dynamics.
Importantly, the US's tariff structure seems to disincentivize the reshoring of generic drug production, which remains heavily concentrated in cost-effective countries such as India and China. This structural inertia will keep generic production offshore, posing challenges for US manufacturing ambitions amid rising input costs. Therefore, the pharmaceutical landscape is not just about tariffs; it's about strategically aligning production to maximize profitability in favorable markets.
While we have no specific internal coverage on relevant currencies tied to this commentary, the shifting tariff landscape imposes a fresh lens on currency fluctuations, particularly USD stability in the face of rising investment flows. The current market consensus has US dollar strength indexed positively to these developments.
Several firms align with the view that these tariff shifts will maintain dollar strength, particularly focusing on the implications for investment in healthcare assets. Conversely, a few firms suggest caution, noting potential backlash in international relations affecting pharma exports. This dichotomy highlights the uncertainty in forecasted dollar trends linked to broader geopolitical implications.
There are no high-impact events on the calendar in the next 30 days that directly correlate with this commentary, allowing the market to adjust to the ongoing tariff structures without immediate external catalysts.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Watch for potential adjustments in the EUR/USD pair as US tariff policies become more concrete. Continued high investment by European firms in the US could push the dollar higher, targeting levels around 1.075 to 1.10.
Risks to this view
Should the ongoing Section 301 investigation yield unexpected punitive tariffs, this could undermine the current investment trajectory in the US pharma sector, potentially reversing dollar gains against the euro.
Articles Where do we stand on pharmaceutical tariffs? Published 15:02 Healthcare Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download With yet another announcement on pharmaceutical tariffs last week, Diederik Stadig takes stock of where we stand on pharmaceutical tariffs Diederik Stadig With the latest pharmaceutical tariffs by President Trump, there is a business case for investing more in Europe 1. The tariff picture is becoming clearer, but some uncertainty still remains The market feared blanket pharmaceutical tariffs of 100-250%.
Instead, the Trump administration has introduced a layered regime combining Section 232 pharmaceutical tariffs with Section 301 trade actions. Products already covered by Section 232 are exempt from the newly announced Section 301 forced-labour tariffs, preventing double counting. Switzerland, Japan and South Korea have secured particularly favourable treatment under the latest Section 301 action through a net-of-MFN approach that caps total duties at 12.5% for covered products.
However, uncertainty remains. The separate Section 301 investigation into structural excess capacity is still ongoing and could result in additional measures later this year. 2. Branded pharmaceutical companies will continue to invest in America at the expense of Europe The US accounts for more than 50% of branded pharma revenues, and often over 60% of profits.
This profitability in the US is why tariffs, Most Favoured Nation pricing agreements and company-specific exemptions have all created incentives for manufacturers to expand production and R&D activities on American soil. Swiss and European pharmaceutical companies have already announced substantial US investment programmes, and we expect this trend to continue. 3. Reshoring of generic drug production will not happen Our core view remains unchanged: global generic manufacturing is concentrated in countries such as India and China for structural reasons: scale, labour costs, supplier ecosystems and established API manufacturing networks.
Even if tariffs on generic medicines eventually materialise, as the current proposal lacks specifics, relocating large parts of the generic supply chain to the US would be extremely expensive and would take years. The economic reality remains that the US depends heavily on imported generics and APIs. High tariffs would primarily increase prices and shortages rather than create a competitive domestic manufacturing base. 4.
Europe needs a pharmaceutical competitiveness strategy As mentioned, the pharmaceutical sector is increasingly being pulled towards the United States. Tariffs are only one factor. Faster approvals, a larger domestic market, higher pricing power, generous industrial incentives and the growing use of trade policy are all contributing to a shift in investment.
At the same time, fiscal constraints, pricing pressure and regulatory complexity continue to weigh on Europe's attractiveness. The consequence is that Europe risks losing not only manufacturing investment but also R&D capacity, pilot plants, scale-up activities and highly skilled employment. Therefore, policymakers should focus on improving the business case for investing in Europe.
On a pan-European level, this includes building on the pharmaceutical package by accelerating regulatory approval timelines, creating larger and more harmonised capital markets and simplifying clinical-trial procedures. But, most importantly, this requires national policymakers to contribute. The emergence of China as an innovation powerhouse adds urgency to this challenge.
European pharmaceutical companies are increasingly caught between a US market that attracts capital and a Chinese market that is becoming a source of innovation, licensing opportunities and biotechnology assets. The biggest story is not tariffs themselves The latest tariff announcements suggest that the most extreme outcomes are becoming less likely. The UK, Switzerland, the EU and several other trading partners have secured more favourable treatment than originally feared, while branded pharmaceutical companies continue to receive pathways that reduce tariff exposure through US investment commitments.
But the bigger story is no longer tariffs themselves. Trump's pharmaceutical tariffs are accelerating a structural shift already underway: pharma is now an important sector for US national security. This means that the US will continue to pull in investment, manufacturing and innovation as the world's most profitable pharmaceutical market.
While the United States gains, Europe faces the risk of gradual industrial erosion unless it develops a more competitive pharmaceutical ecosystem of its own. US Trump Tariffs Pharmaceuticals Europe Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Diederik Stadig Senior Healthcare Economist Diederik Stadig is ING's senior healthcare economist. He joined the firm in 2023 and previously worked at de Vrije Universiteit Amsterdam. He holds a PhD in political economy from the same… In this article 1.
The tariff picture is becoming clearer, but some uncertainty still remains 2. Branded pharmaceutical companies will continue to invest in America at the expense of Europe 3. Reshoring of generic drug production will not happen 4.
Europe needs a pharmaceutical competitiveness strategy The biggest story is not tariffs themselves
How we cover this story
Live cross-firm bank consensus across 32 desks — FX, oil & gold
View bank forecasts