It has been a tough finish to the week for the healthcare sector.
In afternoon trade, the S&P/ASX 200 Health Care index is down 1.4%. This compares unfavourably to a small gain by the broader ASX 200 index.
Here's the current state of play:
- CSL Ltd (ASX: CSL) shares are down almost 2% to $194.30.
- Mesoblast Ltd (ASX: MSB) shares almost 5% lower at $2.37.
- Neuren Pharmaceuticals Ltd (ASX: NEU) shares are down 4% to $19.01.
- Telix Pharmaceuticals Ltd (ASX: TLX) shares have fallen almost 3% to $14.95.
What's going on with CSL and ASX healthcare shares?
Investors have been hitting the sell button in the sector today after US President Donald Trump announced tariffs on pharmaceutical products.
According to CNBC, the United States will impose a 100% tariff on "any branded or patented Pharmaceutical Product" that enters the country from 1 October. This would potentially make the cost of many pharmaceutical products too high for the average consumer.
However, it is worth noting that as with many of Trump's tariffs, there is a way to avoid them.
The US President revealed that these tariffs will not apply to companies that are building drug manufacturing plants in the United States. This exemption covers projects where construction has started and includes sites that have broken ground or are under construction.
On his Truth Social platform, Trump stated:
Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. "IS BUILDING" will be defined as, "breaking ground" and/or "under construction." There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started. Thank you for your attention to this matter!
Is this bad news for CSL?
Last month, when CSL released its FY 2025 results, it released its guidance for the year ahead.
It revealed that it expects group revenue growth of 4% to 5% and NPATA of US$3.45 billion to US$3.55 billion in constant currency. The latter represents 7% to 10% growth year on year.
When giving its guidance, the company stated:
This guidance assumes no impact from pharmaceutical sector tariffs. It is our current expectation that any such policy would not impact our ability to deliver on the strategic initiatives outlined today. CSL has significant operations in the US and the majority of our commercial portfolio is drug-sourced from there.
While CSL has not put out a response to this development to the Australian share market, it has responded to questions from the ABC.
The good news for shareholders is that the biotechnology company is standing firm with its guidance for FY 2026. It told the media outlet:
In addition to CSL's Australian facilities, we have a very significant United States manufacturing footprint. We are already expanding our US capabilities to meet the growing demand for our therapies and we have announced further expansion of significant, new capital investments during the next five years. As per previous market guidance, we do not expect any material impact from these tariffs.
As a result, today's weakness could be yet another opportunity for investors to buy CSL shares on the cheap.
