European Pharma Experts React to US Tariff Uncertainty

The Trump administration's threats of pharmaceutical import tariffs and most-favored-nation drug pricing have weighed heavily on the pharmaceutical industry in recent months. Alongside major changes to the US Food and Drug Administration, many are wondering what impact these uncertainties may have on the global pharmaceutical market.

Although specific details regarding the rates and implementation timeline for the tariffs remain unclear, the Trump administration has indicated that these would impact imported branded, generic and biosimilar pharmaceutical products.

This article is the first in a series exploring how European pharmaceutical companies are responding to whirlwind changes in the US. In this piece, we will discuss some of the long-lasting impacts tariffs could have on the pharmaceutical industry and the steps manufacturers are taking to keep the development of their therapies on track during this period of uncertainty.

Increased drug costs and disrupted supply chains

A report commissioned by the Pharmaceutical Research and Manufacturers of America suggests that a 25% US tariff on pharmaceutical imports would increase US drug costs by nearly $51 billion annually, boosting US prices by as much as 12.9% if passed on.

“The changes are introducing risks and complexity into the industry with the potential for [an] increase in costs due to tariffs imposed on imported goods into the US and reciprocally from the US into the EU, whilst also increasing costs of exported products,” Rob Scott, head of translation consultancy at eXmoor Pharma, told Technology Networks.

Pharma chief executive officers (CEOs) in the European Federation of Pharmaceutical Industries and Associations warned European Commission President Ursula von der Leyen in April that unless Europe delivers radical policy changes, pharmaceutical research and development and manufacturing are likely to be directed towards the US.

To head off potential tariff costs, Eli Lilly, Johnson & Johnson, Merck, Roche and Novartis have all made public statements announcing significant new investments in US manufacturing facilities.

“Long-lasting impacts for manufacturers within the EU [European Union] could be that companies could look to move operations to the US, ensuring access to that market at a reduced cost; however, this may depend on the source of the materials used to manufacture the product,” said Scott.

Alexander Seyf, co-founder and CEO of Autolomous, believes the US tariff uncertainty will have a significant impact, particularly for gene and cell therapy manufacturers reliant on international sourcing: “Immediate consequences include increased costs for European manufacturers supplying the US, as tariffs on APIs [active pharmaceutical ingredients] and finished products are either absorbed or passed on, reducing competitiveness.”

Beyond impacting the cost of therapies, tariffs have the potential to disrupt supply chains, “as specialized materials for complex therapies cannot be easily re-sourced, leading to drug availability delays,” explained Seyf.

“This environment of instability can delay cross-border collaboration, disrupt access to critical components and ultimately slow down scientific progress. Over the long term, such uncertainty risks diverting resources away from innovation toward risk mitigation – potentially stalling breakthroughs and reducing the pace at which new therapies reach patients,” Seyf said.

Building regional expertise within the global pharmaceutical ecosystem

While the US may now start to look inward for manufacturing, a relative calm across the pond means that many European companies are looking to the capabilities on their doorstep to enable the scale and quality previously thought to be dominated by the US.

“For ReiThera, this shift has meant growing demand for EU-based development and manufacturing for preclinical and early phase – particularly in advanced therapies such as viral vectors and cell lines,” Thomas De Maria, head of business development – US at ReiThera Srl, told Technology Networks. “ReiThera Partners are continuing to look for resilient, regional solutions that minimize initial exposure to the tariff discussions taking place in the US, at competitive costs and timelines.”

Instead of prompting domestic production, tariffs might incentivize pharmaceutical companies to shift production to tariff-exempt countries. “The unknowns regarding many factors, including the downstream impact of tariffs, are making European companies look at the feasibility of changing their plans and entering other markets, such as the Pan-Asian region,” Dr. Lindsay Davies, chief scientific officer at NextCell Pharma AB, told Technology Networks.

“In the long term, this [tariff introductions] will foster supply chain regionalization and diversification, as European manufacturers will be actively seeking alternative sourcing or even localized production to mitigate future tariff risks,” Seyf explained. “This is a costly, multi-year undertaking. Such uncertainty also prompts a strategic re-evaluation of investments. The threat of retaliatory tariffs will further destabilize global trade and impact regulatory complexity. Ultimately, these will all translate to hindering global access to affordable medicines.”

Many European pharma companies are taking steps to proactively counter the threats of US tariffs. These measures include challenging their material supply chains, questioning whether the US remains the ideal place to conduct their clinical studies and investing in integrated capabilities under one roof to reduce reliance on global supply chains.

“Historically, trials have been easier to run in the US as the patient pool is large, infrastructure mature and regulations clear and easy to follow. This may change with increased uncertainty in the direction of travel of US regulations,” Scott said.

Collaboration, both with public bodies and with competitors, may also become more likely in the face of manufacturing challenges. As Seyf explained, “We will also be seeing strategic alliances and collaborations, even with competitors, to share infrastructure or tackle pre-competitive manufacturing challenges. These collective strategies build greater operational resilience and adaptability, ensuring patient access to critical therapies remains steadfast amid geopolitical and policy shifts.”

“We are also seeing stronger public–private collaboration here in Italy as well as at the EU level that supports advanced therapy development and vaccine preparedness both for the EU and other parts of the world,” continued De Maria. “These efforts are reinforcing Europe's position as a stable and strategic hub for viral vector and vaccine innovation, even as other regions face unpredictable outcomes.”

While there are concerns about an “exodus” to the US, some companies are optimistic that regionalizing manufacturing and expanding footprints in Europe and other markets could help lessen the reliance on cross-border imports and consequently the impact of tariffs.

Seyf concluded, “European pharmaceutical manufacturers are not sitting idly by in the face of US industry shifts. They are proactively adapting and prioritizing supply chain resilience and diversification. This means thoroughly mapping vulnerabilities, securing alternative sources and building substantial inventory buffers for essential therapies – moving from a just-in-time to a more robust just-in-case model.”