- GSK
- 03 April 2025 10:33:18
Source: Sharecast
At 1020 BST, AZN shares were up 1.4% at 11,383.49p, while GSK was 1.7% higher at 1,458p in a sharply lower London market, with the FTSE 100 down 1.3% at 8,501.02.
Shore Capital analyst Dr Sean Conroy said that based on a clarifying Fact Sheet produced by The White House, it would appear that pharmaceutical goods imported into the US will be exempt from higher-rate reciprocal tariffs, at least for now.
"It is still somewhat unclear whether the broader reaching 10% baseline tariffs could still be levied against imported drugs and vaccines, in our view," he said.
"Given the globalised natural of supply chains across the industry, there had likely been some perceived risk to near-term guidance for GSK…and AstraZeneca…who had travelled poorly into 'Liberation Day', along with the broader cohort of large-cap pharmaceutical companies.
GSK has confirmed to Shore Capital that there is no change to its outlooks based on the available information.
Meanwhile, AstraZeneca has told the broker it is assessing the implications of the announcement and believes "that essential medicines should be exempt" but is also "actively seeking to mitigate any impact".
"We anticipate there might be some sustained weakness in earnings multiples until more clarity can be provided and companies have been able to meaningfully quantify any potential impact at a revenue and earnings level," Conroy said, adding that further detail is likely to be conveyed once we enter the first-quarter reporting season.
"This is the start of a process, the nature, extent, and duration of which will only become clear in time," Conroy said.
He said that key unanswered questions that initially spring to mind if 10% baseline tariffs are levied on pharmaceutical companies are, among others, to what degree this will impact drugs or vaccines across the breadth of portfolios, given that some products will already be domestically manufactured in the US. Also, whether these will be levied against gross or net sales and to what extent companies can recuperate these costs against gross to net discount they currently provide in the US.
He also questioned whether this will become an inflationary pressure that can be passed onto and borne by US patients and payors, in part or in whole, and realistically how quickly these will be phased in and how long they will stick around.
"We anticipate there might be degree of share price volatility over the coming months until there is better visibility around quantifying any potential impact from these tariffs," Conroy said.
"During this time, we would reiterate that the fundamentals for these global pharmaceutical businesses are robust (general populations are still getting older and sicker).
"Importantly, the longer-term revenue ambitions outlined by both extend beyond the remaining term of President Trump (GSK - >£40bn in 2031; AZN - $80bn in 2030) and we would hope to see these reiterated in time."
Conroy noted that pharma often finds itself in the firing line when it comes to US politics, given the prominence of drug prices on the US political agenda and in the US news cycle.
"However, more often than not there is a material difference between travelling and arriving, with the impact realised often far less draconian than initially feared," he said.
