U.S. pharma imports soar in March as drugmakers look to get ahead of potential tariffs

 Pharmaceutical imports to the U.S. jumped in March, according to the latest trade report by the Census Bureau and the Bureau of Economic Analysis, as drugmakers try to avoid any potential tariffs on the sector.

Total imports of pharmaceutical preparations came up to $50.42B in March, a $20.92B increase from February. YTD imports have now reached $108.20B in just a few months, nearly two times that of total imports of $54.87B in all of 2024. 

Imports from Ireland in particular increased to $30.73B in March from $15.27B in February. Ireland is a major hub for drug manufacturing, with household names such as Pfizer (PFE), AbbVie (ABBV) and Johnson & Johnson (JNJ) having significant operations there. 

"The key takeaway from the full March trade report was that the dramatic surge in front-loaded imports during the month was heavily driven by pharmaceuticals being flown in from Ireland, not piles of goods arriving from Asia by boat," JPMorgan said on Tuesday.

"Since some drug ingredients can be frozen for 3-4 years, it’s possible to bring in multiple years’ worth of supply now if it is available, and for tax reasons these imports are usually recorded near their retail price, which far exceeds the cost of production," JPMorgan added.

U.S. President Donald Trump has been mulling tariffs on pharmaceutical imports. Trump on Monday signed an executive order to encourage domestic production of pharmaceutical preparations.

"Because pharma imports are being heavily stockpiled for future use, they don’t have much of an implication for near-term domestic economic activity. They are not being integrated immediately into domestic manufacturing production, nor are they going into final consumption," JPMorgan said. 

"The pharma trade highlights a type of trade that is often arriving by air instead of by ship, and that is small in physical volume but high in price. April could be another strong month for imports with ships arriving from Asia and potentially more pharma imports coming in. Thereafter, vessel trade will likely fall off, but import values could continue to be supported by drug imports until tariffs on them kick in," JPMorgan added.

The S&P 500 Health Care sector is -3.72% YTD, while its accompanying Health Care Select Sector SPDR Fund ETF (NYSEARCA:XLV) is -3.55%.

Here are some exchange-traded funds linked to the Health Care sector: (NYSEARCA:VHT), (NYSEARCA:IHI), (NYSEARCA:IXJ), (NYSEARCA:IYH), (NYSEARCA:FHLC), and (NYSEARCA:FXH).

https://www.msn.com/en-us/money/markets/u-s-pharma-imports-soar-in-march-as-drugmakers-look-to-get-ahead-of-potential-tariffs/ar-AA1Exdc1