Sandoz to engage with US after Trump tariff threat

• Trump's tariff threat would impose 100% tariffs from August 2028, escalating to 200% in 2029 on drugmakers that don't manufacture medicines locally in the U.S.
• Sandoz generates approximately 22% of its sales in North America but has little production there and plans to close its only U.S. manufacturing site on Long Island by end of 2026
• Analysts expect the policy would primarily impact China and India where most generic drugs are made, and would likely raise generic drug prices in the United States if manufacturing returns domestically

Market Summary: Sandoz Responds to Trump Tariff Threat on Pharmaceuticals

Key Developments

Swiss generic drugmaker Sandoz announced it will engage with U.S. policymakers following President Trump's tariff threat against pharmaceutical companies. Trump posted on X that drugmakers must manufacture medicines domestically in the U.S. or face a 100% tariff starting August 2028, escalating to 200% tariffs the following year.

Company and Sector Impact

Sandoz derives approximately 22% of sales from North America but maintains minimal production capacity in the region. The company previously announced plans to close its only U.S. manufacturing facility on Long Island, New York, around end-2026. Sandoz stated it is too early to assess implications for manufacturing operations or future investment decisions.

Market Context

According to the U.S. FDA, over 90% of medicines sold in the U.S. are generics. Most generic drug production has shifted to lower-cost countries, particularly China and India, which would be the primary targets of these tariffs.

Analyst Perspective

Vontobel analyst Stefan Schneider noted the U.S. government aims to reverse offshoring of generic drug production. However, he warned that bringing manufacturing back to the U.S. would likely increase generic drug prices for American consumers.

Implications

The threatened tariffs represent a significant policy shift aimed at reshoring pharmaceutical manufacturing. If implemented, the measures would force difficult decisions for generic drugmakers: either invest in expensive U.S. production facilities or face prohibitive tariffs that could price them out of the world's largest pharmaceutical market. The policy could reshape global pharmaceutical supply chains but at the potential cost of higher drug prices domestically.