Frankie Fattorini
6 min read
In This Article:
As President Trump continues to signal import tariffs on pharmaceuticals to bolster US manufacturing, experts warn this could hike costs and crush biotech, but also spur reconsideration of biopharma production.
Following blanket ‘Liberation Day’ tariffs announced on April 2, Trump stated at an April 6 fundraiser, “We’re going to be announcing very shortly a major tariff on pharmaceuticals; and when they hear that, they will leave China.” While there have been no details released since, the administration has announced other policies like an executive order on the Most Favoured Nation (MFN) model, which, if enforced, will also have a major impact on US pharmaceuticals.
The US imported a total of $213 billion in pharmaceuticals during 2024, according to the UN Comtrade database. India and China are major suppliers of active pharmaceutical ingredients to the US and the various geopolitical actions, including tariffs, are expected to have implications including potentially higher costs for drugs with more on-shore manufacturing, as per a GlobalData Strategic Intelligence report.
GlobalData is the parent company of Pharmaceutical Technology.
For these countries and others, no tariffs are currently imposed on pharma products. As the sector waits for more clarity, experts question if pharma tariffs will coax manufacturers to the US from abroad and instead warn they are likely to simply disrupt the industry, hitting biotech hardest.
Tariffs on pharma imports, as a measure to encourage nearshored manufacturing, are more than offset by the costs of relocation for drug companies, as per Mina Tadrous, assistant professor of drug policy at the University of Toronto in Canada.
Tadrous describes Trump’s proposed tariffs as “an attempt to have a very simple, shortcut, aggressive policy that doesn’t actually address the real issue,” which he says is the vast time and money needed to establish US-based pharma manufacturing. The time taken to recoup these costs ranges from 8–10 years, well over Trump’s remaining time in office, according to Nilanjan Banik, PhD, professor of economics at Mahindra University, Hyderabad, India.
Banik does envision long-term relocation, not to the US, but from high-tariff to low-tariff countries, highlighting Apple’s plans to move phone production from China to India. But Tadrous says that with this strategy of supply chain optimisation would come a risk of supply disruption and subsequent drug shortages.
However, there are signals that pharma companies are preparing to nearshore operations in the US, according to John Singer, founder of life sciences consultancy Blue Spoon Consulting. He notes Eli Lilly’s commitment to invest an extra $27 billion in US plants, in February. Since then, Novartis, Sanofi, and others have made similar pledges.
