Changes media tag, rewrites to include European drugmakers

By Maggie Fick and Kashish Tandon

LONDON/BENGALARU April 3 (Reuters) - Drugmaker stocks rose on Thursday as U.S. President Donald Trump spared pharmaceutical products from wide-ranging tariffs, but executives and analysts said the reprieve was probably only temporary as duties on the industry were still likely.

Trump imposed a 10% tariff on most U.S. imports as well as much higher levies on dozens of rivals and allies alike, but temporarily exempted some goods, including pharmaceuticals, benefiting major exporters including India, Japan, and Ireland.

Asian healthcare stocks surged, led by Indian generic drugmakers, defying a broader market drop.

European healthcare stocks .SXDP also outperformed. Britain's GSK GSK.L and AstraZeneca AZN.L, as well as Denmark's Novo Nordisk NOVOb.CO, rose between 1.5% and 2% after the market open.

However, a U.S. official said on Wednesday the president planned separate tariffs targeting the pharma sector. Trump also name-checked the industry in his tariff announcement, predicting that pharma companies would come "roaring back" to the U.S., and that if they did not, "they got a big tax to pay".

PALL EXTENDS

Many in the industry predicted the recent uncertainty over tariffs would continue to cast a shadow over pharma companies.

"I think the only thing that feels certain is more uncertainty," Barclays analyst Emily Field told Reuters.

"There is no sense of relief really," said one source at a European drugmaker. The sense on pharma sector tariffs, the source said, was: "It's not today, but it's coming."

Trump's executive order listed pharmaceuticals alongside lumber, semiconductors and other sectors that could be subject to investigation under Section 232 of the 1962 U.S. Trade Act.

U.S. manufacturing costs for pharma companies will increase because country-specific tariffs will affect key supplies such as organic chemicals and glassware used to make pharma products, Bernstein analysts said in a note. They calculated an additional $45 billion of import cost risk to the pharma industry.

RBC Capital Markets analysts said it was premature to celebrate the pharma exemption because tariffs could still be implemented, while Goldman analysts said the tariff risk had not been eliminated.

"This gives the biopharma sector a temporary reprieve allowing for continued contingency planning for industry-specific tariffs that the President noted are to come," said Citi analyst Geoff Meacham.

Medical devices and diagnostics equipment did not appear to be included in the exemption. Medical device industry group AdvaMed said in a statement that the tariffs would likely lead to cuts in research and development spending and threatened the U.S. position as a leader of innovation in the medtech sector.

(Reporting by Maggie Fick in London and Kashish Tandon in Bengaluru. Additional reporting by Rishika Sadam in Hyderabad, Manas Mishra in Bengalaru, Paul Arnold in Zurich, Dominique Patton in Paris, and Deena Beasley in Los Angeles; Editing by Savio D'Souza and Mark Potter)

((Kashish.Tandon@thomsonreuters.com; 8800437922;))