Key Takeaways
- Tariffs could spike drug costs: Proposed 25% tariffs on pharmaceuticals may raise US drug prices by up to 12.9% and cost the industry an estimated $51 billion annually.
- Supply chain disruption is growing: Pharma and medtech sectors face significant supply chain strain, including delays and pricing spikes, due to tariff volatility and reliance on global manufacturing.
- Reshoring and R&D impact: Companies are investing in US facilities to offset tariffs, but increased costs—especially for imported APIs—are forcing firms to reallocate R&D resources, potentially slowing innovation.
Tariffs galore officially commenced April 2, when President Trump announced that he would be enacting reciprocal tariffs on countries that are running trade surpluses with the United States—those in which the country has the largest trade deficits.1
He had been able to levy these tariffs by declaring a national economic emergency, making the decision without Congress per the 1977 International Emergency Powers Act.
Since that time, Trump has imposed fentaynl tariffs on Canada, Mexico, and China; United States had also enacted steel and aluminum taxes on Canada; and taxes on automobile parts to name a few.
Impacting the general supply chain
Now, with possible 25% US tariffs on pharmaceuticals looming, much of industry would agree that they would impact not only the pharma manufacturing sector, but the overall supply chain as well.
For one, a report2 commissioned by the trade association, Pharmaceutical Research and Manufacturers of America (PhRMA)—whose members include Novartis, Novo Nordisk, and Pfizer, Sanofi, and Takeda among the list—predicts that the tariffs would raise drug costs in the United States by nearly $51 billion yearly, while also raising US prices by as high as 12.9%.
This is in the midst of various companies—such as Regeneron, Roche, Merck, and Thermo Fisher3—reshoring production to the United States in order to avoid paying these hefty tariffs—a process that can take years if the proper infrastructure is not already put in place.
Infrastructure can not only include facilities, but the equipment that powers them. Existing tariffs have indirectly hit medtech (devices and equipment), and iData Research, a market researcher, anticipates major supply disruption across the sector.4
"With the US medical device and pharmaceutical sectors highly dependent on global supply chains, tariff volatility is triggering real consequences, from procurement delays to pricing spikes," said Dr. Kamran Zamanian, iData Research’s CEO. "In today's trade environment, protecting margins in the $200B medtech industry requires contingency planning, supplier diversification, and close monitoring of policy changes."
