While pharmaceuticals are still exempt from US tariffs, President Donald Trump has threatened a potential 200% tariff on these imports, perhaps from 2027. Reciprocal tariffs announced prior have also been delayed by a month to Aug. 1, 2025.

Australian healthcare stocks barely reacted. Trump’s stance on tariffs has changed often and there is little clarity whether this is simply posturing. The 200% rate is not set nor the timing with Trump maybe giving up to 18 months before it takes effect.

How might ASX companies be affected?

Out of 12 names in our ASX healthcare coverage with US revenue exposure, pharmaceutical tariffs will only directly affect CSL (CSL).

Telix (TLX) manufactures entirely in the US, while CSL processes some US products in Australia but has many facilities in the US and some flexibility to adjust supply chains.

If enacted, reciprocal tariffs will affect Ansell (ANN), Polynovo (PNV), Nanosonics (NAN), and Fisher & Paykel Healthcare (FPH). We expect Ansell bears the brunt as it produces most of its US volumes in Southeast Asia which is heavily affected.

However, we expect these firms to adapt and largely offset the negative impact long term.

Fair Value estimates untouched

We maintain our fair value estimates for all of the companies named above. We think Trump’s position on pharmaceutical tariffs are likely to evolve and expect CSL to respond accordingly.

While increasing uncertainty near-term, we don’t expect CSL’s earnings to be materially affected because tariffs this high are unlikely to persist and CSL can adapt by onshoring manufacturing.

Are CSL and Telix undervalued?

CSL shares remain undervalued.

We think the market is less optimistic on long-term demand for plasma products despite improving diagnosis rates for existing and new indications. CSL also manufactures a significant amount of plasma and vaccine products in the US already.

While Telix is enviably exempt from all potential tariffs on pharmaceuticals, shares remain overvalued.

The firm announced reimbursement support for its slightly improved product, Gozellix, as we expected. However, we still forecast average selling prices to fall 9% by fiscal 2027 given Illuccix’s transitional pass-through payment status expired in June 2025, likely making it notably cheaper for most private pay customers.

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Terms used in this article

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.