New US drug pricing policy unsettles German pharmaceutical industry
Shares of Merck, one of Germany's pharmaceutical companies, closed 0.74 percent lower on Friday, even as the benchmark DAX index rose by 0.3 percent.
The decline came a day after Merck revised down its full-year sales forecast for its life science division, now expecting revenue between 8.8 and 9.4 billion euros (US$10.6-11.3 billion), compared with the previous outlook of 9.1 to 9.8 billion euros.
The company cited market uncertainties, including potential new US tariffs, as key factors behind the adjustment.
On Monday, US President Donald Trump signed an executive order aiming to peg domestic drug prices to the lowest prices in comparable countries, a so-called "Most Favored Nation (MFN)" policy. The order, which lacks implementation details, threatens to impose tariffs on imported medicines otherwise, sending ripples through the global pharmaceutical industry and raising concerns particularly in the EU.
Trump has claimed the move could cut US drug prices by 30 to 80 percent. However, according to German consultancy Simon-Kucher, such pricing rules could lead to a 64 percent drop in pharmaceutical sales in the United States and a 37 percent decline globally.
The Simon-Kucher study published Monday further warned that a collapse in US sales may push German pharmaceutical companies to raise prices in domestic and European markets, or exit them entirely to protect their profit margins in the United States.
The US Pharma MFN policy, if implemented, could upend the mode the pharmaceutical industry which has been counting on the United States to fund new medicine research and development, the report added.
"Every dollar we spend on tariffs is a dollar we can't spend on research and development," said Sebastian Guth, chief operating officer of Bayer Pharmaceuticals, last month at the Semafor World Economy Summit in the United States.
Bayer, another major German life science player, reported modest growth in its pharmaceutical division in the first quarter of 2025, with prescription drug sales rising 4.1 percent and adjusted EBITDA up 12.4 percent.
While Bayer CEO Bill Anderson said Tuesday that the immediate impact of US tariffs on the company is limited, he noted that the company remains alert to geopolitical and economic uncertainty.
For Germany's broader pharmaceutical sector, however, the risks are far more pronounced. A recent Deloitte study estimated that a 35 percent US tariff on drug imports could slash German pharmaceutical exports to the US by 53 percent, resulting in industry losses of up to 13.4 billion euros over three to four years.
Even a modest 10 percent tariff could reduce German pharmaceutical exports by 2 percent compared to their 2023 levels.
