Pharma industry dodges tariff blow but still braces for disruption

Jenna Philpott

Thu, Apr 3, 2025, 5:02 AM 5 min read

US President Donald Trump has imposed a sweeping 10% tariff on all imported goods, alongside additional country-specific duties, as part of his broader effort to shift global trade and increase domestic manufacturing.

However, it appears that the pharma industry has avoided a big blow – for now. A factsheet released by the White House said that finished pharmaceuticals are not subject to the reciprocal tariff. Shares in AstraZeneca and GSK climbed today (3 April) following news of the exemption.

While pharmaceutical imports are exempt from the steeper reciprocal tariffs – such as the 20% duty on European goods and 34% on Chinese imports – the industry remains vulnerable to the broader economic impact of the new trade policy.

Although finished pharmaceuticals are excluded from the tariffs, the 10% blanket tariff on all imports is still expected to have significant consequences for the industry.

Pharmaceutical companies rely on a vast and intricate global supply chain for raw materials, active pharmaceutical ingredients (APIs), and manufacturing equipment – many of which will now be subject to higher costs.

Analyst chatter has suggested that predicting the precise impact of tariffs on pharmaceutical companies is difficult due to their vast and complex manufacturing networks, which span multiple geographies and involve numerous suppliers. Even if finished drugs themselves are not subject to higher tariffs, the increased cost of imported inputs could still disrupt manufacturing and raise prices.

"Drug costs are still expected to rise, given the overall effects of the tariffs in many countries. The pharma industry is still affected by the tariffs in other ways, such as paying more for packaging," said GlobalData analyst Cyrus Fan.

GlobalData is the parent company of Pharmaceutical Technology.

Trade association Biotechnology Innovation Organization (BIO) released survey results and analysis last month, which highlighted that 90% of US biotech companies rely on imported components for at least half of their US Food and Drug Administration (FDA)-approved products. Most of the US biotech companies that are members of the BIO (94%) forecast a “[surge in] manufacturing costs if tariffs are placed on imports from the European Union (EU)”.

The US has seen a decline in domestic manufacturing capacity, and pharmaceutical plants require specialised infrastructure, regulatory approvals, and skilled labour – making rapid relocation a significant challenge. While companies such as Eli Lilly and MSD have expanded their US production to mitigate tariff risks, these investments are long-term strategies rather than immediate solutions.