Sandoz Shares Fall on Concerns Over Proposed U.S. Generic Drug Tariffs

Shares of Sandoz Group AG (SIX:SDZ) fell sharply on Wednesday after U.S. President Donald Trump announced a plan to impose significant tariffs on imported generic medicines starting in 2028. The news raised investor concerns over the long-term profitability of one of the world's largest generic drug manufacturers, which has a substantial presence in the U.S. market.

Details of the Tariff Proposal

The proposal, aimed at encouraging pharmaceutical companies to move production to the United States, outlines a phased implementation of new import duties. According to the plan announced by Trump, imported generic drugs would:

• Remain exempt from tariffs for a two-year period beginning August 1.
• Face a 100% tariff starting in August 2028.
• Be subject to a 200% tariff a year later, in August 2029, if production is not relocated to the U.S.

Market Reaction and Industry Outlook

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Sandoz shares declined 2.9% to CHF 64.58 on the news, making the company one of the weakest performers on Switzerland's benchmark SMI index, which was up 0.3% during the session. As a leading global producer of generic medicines and biosimilars with a large international manufacturing footprint, Sandoz is seen by investors as particularly exposed to the potential policy change.

While the tariffs would not take effect for several years, the market is already focused on the potential consequences. Multinational drugmakers may need to accelerate investments in U.S.-based manufacturing or fundamentally restructure their supply chains to maintain margins. Industry groups have warned that shifting low-cost generic production to the U.S. could substantially increase manufacturing expenses, potentially impacting the affordability of medicines for consumers.

Sandoz has previously stated that it was too early to assess the proposal's full impact on its manufacturing footprint or investment plans and that it would engage with U.S. policymakers on the matter.