Analyzing Tariffs’ Effect on the Biopharmaceutical Supply Chain

In a video interview with Pharma Commerce, Paul Levesque, CEO of Theratechnologies, explains how Theratechnologies' operations have been impacted by recent US tariffs on Canadian goods, especially concerning the manufacturing and supply chain for its HIV therapy, EGRIFTA SV. The active ingredients used in EGRIFTA SV come from the US, travel to Canada for additional processing, and then return to the US for final assembly. As a result, the company faces tariffs on both the raw materials and parts of the manufacturing process that cross the US-Canada border. While the tariffs will increase costs, the company benefits slightly since the tariffs are applied to raw materials and intermediate steps, rather than the fully finished product, which would have resulted in a higher cost increase.

Theratechnologies is currently assessing the full impact of these tariffs on its supply chain, including effects on insurers, governments, and patients. Despite these challenges, the company remains committed to ensuring timely delivery of its therapies to patients, managing the increased costs as best as possible.

Levesgque also comments on the forecasted obstacles regarding the availability of specialty medicines for US patients; making the decision to reshore manufacturing processes; and much more.

A transcript of his conversation with PC can be found below.

Note: The FDA approved the company’s supplemental Biologics License Application (sBLA) for the F8 formulation of tesamorelin for injection on March 25. The new formulation will be commercialized under the tradename EGRIFTA WR and is expected to EGRIFTA SV.

PC: How have the recent US tariffs on Canadian goods impacted Theratechnologies' operations, particularly in terms of cost and supply chain management for your HIV therapies in the US market?

Levesque: We will be affected by that, because the different ingredients that actually get into the making of EGRIFTA SV comes from the US, and comes to Canada for additional progress in the manufacturing. Then, it crosses the border again back to the US. Any company is going to have to do a very tight assessment of supply chain—which we have done—and currently, the active ingredient comes from the US, crosses the border in Canada, and will be taxed on the value of that active ingredient.

Then, there's part of the manufacturing process that is being done in Canada. When it will cross the border to the US, it will be taxed again on the value of that part of the manufacturing process, and the final assembly is done in the US.

In our case, there will be tariffs affecting the cost of manufacturing. Fortunately, it will be done on the value of what's crossing the border. Since this is raw material the first time and only another step in the production the second time, the value is not as high as the finished product, because if the finished product is $100 and you have tariffs of 25%, that tells you how much of an increase it will be.

In our case, there will be an increase. We'll try to manage that the best possible way. We're not done with assessing the impact of that for insurers, for governments, and for patients, but we are committed to making sure that our drugs will get to patients on time, every time, as they should.