3 Pharmaceutical Stocks at Risk as Tariffs Threaten Supply Chains—Here's Where to Bet Instead

The U.S. pharmaceutical sector is bracing for a seismic shift as proposed tariffs on imported drugs and ingredients loom large. With Section 232 investigations underway and retaliatory measures escalating, companies reliant on foreign manufacturing face soaring costs, supply chain bottlenecks, and margin erosion. For investors, this isn't just a risk—it's an opportunity to pivot toward undervalued rivals primed to capitalize on the turmoil.

Why Tariffs Are a Game-Changer for Pharma

The U.S. has already imposed a 10% global tariff on imported healthcare goods, with China facing up to 245% duties and Canada/Mexico hit by 25% tariffs on medical devices. These measures target critical vulnerabilities:
- 40% of U.S. generic drug APIs come from China, now subject to punitive levies.
- $45.5 billion in 2024 drug imports from Ireland—a hub for multinational manufacturers—are under scrutiny.

The Department of Commerce's ongoing Section 232 investigations could escalate tariffs further, with pharmaceuticals potentially facing 20–200% rates by late 2025. For companies with thin margins and fragile supply chains, this spells disaster.

3 Stocks at Risk: Vulnerable to Tariff Shock

1. Amgen (AMGN): Ireland's Tax Haven Becomes a Tariff Trap

Amgen sources 80% of its generic manufacturing from Ireland and Singapore. With the U.S. targeting imports from these regions, its 3.5% operating margin leaves little buffer for cost spikes. The company's tax-driven manufacturing strategy now looks risky as tariffs erode profit margins.

2. Pfizer (PFE): Reliance on European Supply Chains

Pfizer's Ireland-based operations and German-manufactured drugs like Prevnar face tariffs, compounding challenges from falling Paxlovid sales. Its $43 billion Seagen acquisition adds debt pressure, while its 12% API self-sufficiency rate leaves it exposed to global supply disruptions.

3. AbbVie (ABBV): High Debt, Thin Margins, and Tariff Exposure

AbbVie's $20 billion U.S. manufacturing plan is too little, too late. Its $50 billion debt pile and reliance on Canadian/Irish-made drugs like Humira and Rinvoq amplify risks. With patent disputes and 125% Chinese retaliatory tariffs on its exports, this stock is a liquidity time bomb.

3 Undervalued Winners: Companies to Buy While the Tariff Cloud Hangs

1. Eli Lilly (LLY): U.S. Manufacturing Leader with Pricing Power

Lilly is already 30% more self-sufficient in APIs than peers, with $5 billion allocated to U.S. manufacturing. Its 12.5% operating margin and strong diabetes drug pipeline (e.g., donanemab) allow it to absorb costs while hiking prices.

2. Merck (MRK): Diversified Supply Chain and Strong Balance Sheet

Merck's $3 billion U.S. API plant and partnerships with India's top API makers insulate it from tariff spikes. With a 15% operating margin and $20 billion in cash, it can acquire distressed rivals or boost dividends as peers falter.

3. Vertex Pharmaceuticals (VRTX): Niche Innovation with Global Reach

VRTX's focus on high-margin therapies (e.g., Trikafta) and 100% U.S.-based production shield it from import tariffs. Its $6 billion cash hoard and 25% annual sales growth make it a buy as competitors grapple with cost pressures.

Call to Action: Pivot Before the Tariff Wave Hits

The writing is on the wall: supply chain fragility and margin sensitivity are dealbreakers in this new trade environment. Investors should exit AMGN, PFE, and ABBV now and allocate to LLY, MRK, and VRTX—stocks with the scale, diversification, and pricing power to dominate in the post-tariff era.

The clock is ticking. Act before tariffs turn vulnerability into value destruction.

Data as of May 23, 2025. Past performance does not guarantee future results.