By Mackenzie Tatananni

Biopharmaceutical stocks are having their time in the spotlight thanks to President Donald Trump, who vowed to take aim at Ireland's status as a pharma hub with new tariffs. Analysts at Jefferies say there is a smart way to play the sector.

On Monday, Trump raised the idea of bringing biopharma manufacturing back to the U.S. by imposing tariffs on products made outside the country.

"We'll be announcing pharmaceuticals at some point, because we have to have pharmaceuticals," the president said. While Trump didn't provide details, he stressed that the announcement would come "in the very near future, not the long future."

Pharma stocks took a hit. The iShares U.S. Pharmaceuticals ETF closed down 1.2% on Wednesday, bringing their loss since Monday's close to 3.1%. , after falling 3.1% since Monday's close.

That wasn't all Trump had to say. Speaking at the Oval Office on Wednesday, Trump asserted that the U.S. "doesn't make anything," and singled out Ireland as a major manufacturer of drugs.

The president made similar comments after meeting with Irish Prime Minister Micheál Martin earlier this month, saying the country had "the entire U.S. pharmaceutical industry in its grasp."

Ireland began seeking foreign direct investment in the 1950s, founding IDA Ireland to oversee these efforts. Over decades, the country developed into what the National Science Foundation describes as "a global powerhouse in the life sciences sector."

And it continues to grow, as its concentration of major biopharma players build out their operations. In September, Eli Lilly announced that it would invest around $1.9 billion in a new facility in Limerick, generating about 1,000 jobs.

Jefferies analysts held out nine large-cap pharma companies in their coverage, noting that all but one have manufacturing locations in Ireland. These include AbbVie, Amgen, Biogen, Bristol Myers Squibb, Gilead Sciences, Johnson & Johnson, Eli Lilly, Merck, and Pfizer.

Only one company, Vertex Pharmaceuticals, limits its manufacturing operations to the U.S., specifically Boston. In this case, standing out from the pack could be a superpower.

Jefferies noted that Amgen and Biogen would be the most exposed to Ireland-centric tariffs, while Gilead and Vertex would have lower exposure.

"Amgen has manufacturing operations in Ireland and Singapore which results in a benefit to their effective tax rate of -6%," the analysts wrote. "Biogen also has a benefit to their effective tax rate of -8% due to taxes on foreign earnings."

On the flip side, Vertex and Gilead, are relatively safer bets, Jefferies said. The latter bases most manufacturing in California and sells most of its HIV drugs in the U.S.

Jefferies noted that proposed import taxes on Canada, China, and the European Union "could impact development and manufacturing costs more broadly."

The firm cited a recent survey of 42 biotech companies, which showed that 90% of U.S. biotechs rely on imported components for "at least half of FDA approved products." As a result, many companies may need to find new research and manufacturing partners as a result of EU tariffs, Jefferies said.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 27, 2025 10:18 ET (14:18 GMT)

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