Generic tariffs may be favorable for drug distributors, Evercore says
MCK•Drug distributors named as likely beneficiaries
McKesson MCK.N, Cardinal Health CAH.N, and Cencora COR.N dominate the U.S. pharmaceutical wholesale distribution industry
Brokerage says there could be exceptions made for companies that are building U.S. capacity, even if not completed by the 2028/29 deadlines
Up to last close, CAH up 10.5%, MCK up 1% and COR down 10.3% YTD
Evercore sees potential tailwind from generic drug tariffs
** Evercore analysts say tariffs imposed on generic drugs could potentially be a tailwind for U.S. drug distributors
** Trump said in a post on X on Tuesday that generic drugmakers will have to manufacture medicines for the U.S. locally or be hit with a 100% tariff from August 2028 followed by a 200% tariff starting the year after
** "We estimate that generic drugs make up ~50% of distributor gross profits and that the distributors should broadly benefit from the generic drug tariffs starting in 2028" says Evercore
** However Evercore cautions that some of the generic gross profit is more fixed in nature and with tariffs potentially rising 100% or more, the distributors will likely structurally share their higher profit dollars with other channel participants
