Europe’s pharma industry braces for tariffs as carve-out hopes fade

COPENHAGEN, Denmark — Europe’s pharmaceutical sector is bracing for the potential impact of U.S. tariffs as hopes of an industry-wide exemption by U.S. President Donald Trump fade.

The pharmaceutical industry has until now been exempt from trade levies, but Trump confirmed last week that he would soon impose tariffs on the sector.

Drugmakers are now lobbying the president for a phased approach to duties on imports to the U.S., Reuters reported Tuesday, citing four sources familiar with the discussions. The sources said the levies may not be announced Wednesday but were likely inevitable.

Gradual implementation of tariffs on the sector could reduce the immediate financial hit and allow companies time to relocate their manufacturing stateside. Nevertheless, some firms have warned that the lack of clarity is already having negative secondary effects.

“For us, what is more important is not only the impact of tariffs, it’s also the impact it makes on the market,” Ester Baiget, CEO of Danish biotech firm Novonesis, told Tuesday.

“When you bring tariffs, it drives uncertainty, and when you [are] uncertain, you pause, you pause innovation, you post launches, you pause investments,” said Baiget, whose firm derives around 30% of its sales from the U.S. but has also been boosting its manufacturing presence in the country.

Denmark is one of Europe’s largest pharma and biotech hubs, home to companies including Wegovy-maker Novo Nordisk and vaccine-producer Bavarian Nordic — both of which have high exposure to the U.S.

Novo Nordisk’s chairman told last week that the company was not speculating ahead of Trump’s tariff announcement and was instead focused on remaining flexible.

“It doesn’t make a lot of sense to speculate too much,” Chairman Helge Lund told on the sidelines of the Danish pharmaceutical giant’s Annual General Meeting. “We are laser-focused on what we can impact.”

Still, questions have been asked about how tariffs might impact U.S. sales of Novo’s hugely popular obesity and diabetes treatments — and the implications for U.S. rival and Zepbound-maker Eli Lilly. Lund would not be pressed on what share of its weight-loss drug sales derived from U.S. plants, instead pointing to the firm’s “very significant” manufacturing set-up in the U.S.

The threat of tariffs has added to uncertainty within the investment landscape too. Speaking to Monday, Emily Field, head of European pharmaceuticals research at Barclays, cited tariffs as the “No. 1 question on investors’ minds.”

Morten Bødskov, Denmark’s minister for industry, business and financial affairs, told Tuesday that he was liaising with the country’s pharmaceutical industry and corporates more broadly about the potential impact of tariffs on the small, export-heavy economy.

“We are, of course, in close dialog with them,” Bødskov said. “It’s our job to bring them into discussions on the way the world is changing. Many of them are world-leading companies, so it’s our job to help them to see the perspectives of future markets,” he added.

However, he noted that it was unclear whether the Trump administration could be persuaded to roll back on its protectionist policies, or make allowances for certain sectors.

For companies like Novonesis, meanwhile, Baiget said it was a matter of watching events “very closely” — and readying for action if needed.

“There is a lot of volatility, and there is a lot of rapidly moving trends,” she said. “It’s important that we decouple, and we also learn how to maybe buffer some of them.”