After long weekend for the National Holiday of August 1st, the Zurich Stock Exchange reopens with a bang but in a negative sense. Upon reopening on Monday, theThe SMI index fell sharply by 1,79%., the only European stock market in the red on a day when other markets are trying to rebound after Friday's defeat. Switzerland, protected by the holiday closure on Friday, was suddenly overwhelmed by a double wave of turbulence from the United States.
On the one hand, President Donald Trump's announcement on'Imposition of record 39% tariffs against Bern, on the other a frontal attack on multinational pharmaceutical companies, among which the two Swiss pillars stand out: Novartis and Roche.
Trump attacks Bern, imposing 39% tariffs on Swiss exports
The blow came on Thursday evening, when Trump signed an executive order that imposes 39% tariffs on a wide range of Swiss productsThe official reason is the trade deficit with the Confederation, which according to the president would be rose to $40 billion“It’s huge,” he said bluntly, dismissing any attempt at diplomatic dialogue.
In Bern the reaction was one of shock.The Federal Council has called an extraordinary meeting, reaffirming its commitment to a negotiated solution. But frustration is growing in Parliament. "It's not clear what the United States wants from us," a Swiss MP told the Financial Times, expressing the sfeeling of a nation being treated like a rogue state.
Indeed, the 39% rate exceeds even the 35% imposed on Serbia and is more than double the 15% agreed upon with the European Union. This move marred the Swiss national holiday and is labeled by many analysts as arbitrary, unfounded, and politically motivated.
Pharmaceuticals under siege: Novartis and Roche risk a double whammy
The two major players in the Swiss pharmaceutical industry are paying the highest price. Novartis e Roche Not only are they among the companies most exposed to the American market, but they are also in the direct sights of the White House. Both are facing a double impact: that of the trade duties and that of the letter (a sort of ultimatum) signed by Trump, with which calls for a drastic reduction in the prices of drugs sold in the United States.
The pharmaceutical sector represents approximately half of Swiss exports to America, with a value of over 30 billion dollars in 2023 alone. A share that now risks being heavily reduced.
Washington's diktat forces Big Pharma to cut prices
In letter sent to 17 industry giants, including Pfizer, Sanofi, MSD and AstraZeneca, Trump gave 60 days to align prices of medicines at the lowest levels practiced in OECD countries. Otherwise, he threatened parallel imports from cheaper markets and new regulatory measures.
The request represents a break from the Republican Party's historically favorable attitude toward the private sector. And according to Reuters, has already generated strong concern in the top echelons of multinationals, who fear a plummeting margins in their most profitable market.
Switzerland fears a flight of businesses
interpharma, the association representing 23 pharmaceutical companies in Switzerland, she says she is worried but cautious“At the moment we have no signs of departures,” the spokesman declared Georg Därendinger, "but if the threats were to become facts, some companies might reevaluate their presence." The risk is that Switzerland's attractiveness as a location would decline, with investment and research likely to slow sharply.
The pressure on Novartis and Roche is twofold. In addition to the price demands, there remain the indirect effects of the tariffs are hanging in the balance: even though drugs, at least for now, are not among the categories directly affected by the new tariffs, the uncertainty is total.
Market effects: Pharmaceutical stocks collapse in Zurich
It's no surprise, then, that the pharmaceutical sector was the hardest hit when the stock market reopened. Roche opened in the red, losing more than 1,3%, Novartis lost 1,79%, and Alcon 1,59%. These three stocks alone account for almost a third of the capitalization of the SMI index.
Sales have Other big names on the Swiss stock market were also hitRichemont lost 1,16%, Swatch, -0,72%, Kühne+Nagel 1,13%, UBS 0,59%. Only Swisscom, up 2,56%, limited the damage, the only company in positive territory.
Contagion possible in Europe, Italy at risk of delays
The Trump effect does not stop in Switzerland. requests to lower prices in the United States they could push pharmaceutical companies to compensate elsewhereIn Europe, where prices are already regulated and margins are thinner, the risk is that the launch of new drugs will be slowed down or access strategies will be revised.
In particular, the criteria for launch sequencing – that is, the order in which a drug is marketed in various countries – and of the price referencing, the mechanism that links local prices to international ones. Italy, due to the long waiting times and stringent refund policies, risks ending up at the bottom of the list.
Even the franc is creaking, Swiss certainty is fading
Not even the Swiss currency emerged unscathed from the stormThe franc, traditionally a safe haven in times of uncertainty, showed signs of weakness. The euro gained 0,4%, rising to 0,9348 francs, while the dollar strengthened to 0,8087. This signaled that even Swiss stability is no longer a given.
