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The three largest pharmaceutical companies listed on the Australian Securities Exchange (ASX: ASX) have collectively lost more than $6 billion in market value today after US President Donald Trump revealed an incoming major announcement of tariffs for the sector.
Whilst pharmaceuticals had been exempt from the USA's planned so-called reciprocal tariffs, recent biotech investor sentiment demonstrated scepticism as to whether such exemptions would endure.
With reciprocal tariffs set to come into effect at midnight tonight, including an uplifted 104 per cent tariff on Chinese goods in response to China's 34 per cent retaliatory tariffs, today the USA's 47th president revealed pharma would be targeted next.
"We're going to tariff our pharmaceuticals, and once we do that they're [pharma companies] going to come rushing back into our country," Trump told a National Republican Congressional Committee.
"The advantage we have over everybody is that we're the big market, so we're going to be announcing very shortly, a major tariff on pharmaceuticals.
"When they hear that, they will leave China, they will leave other places, because they have to sell - most of their product is sold here - and they're going to be opening up their plants all over the place in our country."
Related story: Investors still sour on biotech despite pharma exemptions in US tariffs
According to Trading Economics figures based on UNCOMTRADE data, pharmaceutical products were Australia's third-largest export category to the USA last year with a value of US$1.35 billion ($2.25 billion).
In the aftermath, Australia's largest pharmaceutical company CSL (ASX: CSL) has seen its shares fall by 4.75 per cent, shaving off its market capitalisation by almost $3.8 billion, while declines have been felt for Telix Pharmaceuticals (ASX: TLX) and Mesoblast (ASX: MSB).
Radiopharmaceuticals company Telix has been one of the ASX's breakout success stories in the post-COVID era with a market capitalisation of almost $8.4 billion prior to today's announcement, developing treatments and diagnostics for a range of conditions, as well as building a radiopharmacy network in the US.
Mesoblast rose to fame during the pandemic when hopes were riding high on its pivot to applying its stem-based Remestemcel-L (R-L) treatment to COVID-19 sufferers in the acute stage of respiratory distress syndrome.
That pivot ultimately failed and the share price plunged, but breakthroughs in late 2024 put it back on the recovery path.
In December, the US Food and Drug Administration approved its core product, branded as Ryoncil, as the first mesenchymal stromal cell (MSC) therapy in the United States, and the only approved therapy for steroid-refractory acute graft versus host disease (SR-aGvHD) in children two months and older, including adolescents and teenagers.
Telix and Mesoblast shares have fallen 3.5 per cent and 6.86 per cent respectively today, representing declines in market capitalisation of $293 million and $152 million.
In the wake of the USA's reciprocal tariff announcement, both Telix and Mesoblast emphasised most of their manufacturing took place in the United States itself.
"Mesoblast believes that its allogeneic cellular products, including Ryoncil and Revascor, will not be subject to the tariffs," the group stated last week.
"Mesoblast develops allogeneic products based on its proprietary remestemcel-L and rexlemestrocel-L mesenchymal lineage stromal and precursor cell platform technologies.
"Its allogeneic cellular products derived from these platforms are manufactured from US donors in the US and designated as US origin products."
On Monday, Telix highlighted the majority of its workforce was US based.
"Telix has an extensive US-based manufacturing and distribution infrastructure, including third-party manufacturing sites and radiopharmacy partner networks, for the production and delivery of its FDA-approved products Illuccix and Gozellix," the company wrote in a statement.
"Due to the ‘just-in-time’ nature of radiopharmaceutical products, such products are generally manufactured or radiolabelled in close proximity to the point-of-care. This will continue to be the case for new products that the company expects to launch in 2025."
The only other ASX-listed pharmaceutical company with a valuation above $1 billion is Neuren Pharmaceuticals (ASX: NEU), and its shares are down 3.44 per cent at the time of writing, representing a $40 million loss in value.
Other companies in the space have also seen falls, including PYC Therapeutics (-5.5 per cent), Mayne Pharma (-1.96 per cent), Clinuvel Pharmaceuticals (-2.91 per cent), Clarity Pharmaceuticals (-4.74 per cent), and Immutep (-5.4 per cent).
Even medical device companies have not been immune to the fallout, with shares in hearing implants company Cochlear (ASX: COH) down 1.44 per cent today. Polynovo, a company whose patented bioabsorbable polymer technology NovoSorb is used to treat wounds and burns, is down 5.69 per cent despite revealing record monthly sales in March.
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