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The information contained in this post is believed to be reliable as of  October 20, 2025.

Because of sourcing, production environment, and transportation sensitivities, tariff uncertainties can present complex financial and operational challenges to pharmaceutical companies. Reported tariffs of 100% on brand-name or patented pharmaceutical products imported into the United States have been paused pending ongoing negotiations to secure pricing agreements. While details are unclear, any policy shift could disrupt the global pharmaceutical supply chain, which has historically prioritized efficiency and accessibility.

The stated aim of the new tariff is to bring pharmaceutical prices down through encouraging domestic production. However, unintended consequences may include rising costs, increased complexity, and heightened regulatory risks for pharmaceutical companies and others involved in the testing, manufacturing, packaging, and distribution of products.

Overview of recent changes to global pharmaceutical trade

Historically, countries including the US, the UK, the EU, Canada, and China have adhered to the World Trade Organization’s (WTO’s) Pharma Agreement, which imposes no tariffs on pharmaceutical products to promote the affordability and accessibility of medicines.

However, in April 2025, the US implemented a 10% global tariff on nearly all imported goods, impacting pharmaceutical and healthcare sectors by increasing costs for critical inputs such as active pharmaceutical ingredients (APIs), specialized reagents, manufacturing equipment, and medical devices. Concurrently, a Section 232 investigation was launched to assess whether pharmaceutical imports and their ingredients pose a national security risk, especially as the US imports APIs from producers in China and India.

Affected medications may include widely used asthma treatments, cancer therapies, and weight loss drugs, as well as select vaccines. Pharmaceutical products from the EU and Japan are believed to be limited to 15% tariffs given their specific trade agreements, which is still significant but much lower than the proposed global 100%.

A potential sign of ongoing deal-making is the launch of TrumpRx, a direct-to-consumer website offering drugs at government-negotiated prices. Pfizer was the first pharmaceutical company to participate, reducing drug costs and committing US$70 billion to US manufacturing, in exchange for a three-year tariff waiver on its products. A deal with a British-based drugmaker will also see it sell some medicines at a discounted price in exchange for tariff relief. However, the impact of all these developments on pricing for future drug releases, both overseas and in the US, remains uncertain.

Adding to a complex landscape, another Section 232 investigation was launched in September 2025 to assess the national security implications of imports of personal protective equipment (PPE), medical consumables, and medical devices. Given that 75% of US medical devices are manufactured abroad — primarily China, Mexico, and Canada — further tariffs risk increasing costs and causing shortages of critical equipment. Additionally, tariffs on steel and aluminum could disrupt the production of hospital tools and equipment, further straining supply chains.

Tariffs’ side effects on pharmaceutical supply chains

Tariffs have created a more complex, restrictive, unpredictable, and evolving trade environment for pharmaceutical organizations operating globally. Like many other industries, the stability and security of trade and supply chains for pharmaceuticals are increasingly being challenged.

Generally, trade disruptions can raise the risk of supply interruptions, manufacturing delays, and cost volatility. For the pharmaceutical sector, the effects can potentially extend beyond operational inefficiencies, potentially delaying patient access to critical medicines. In the longer term, while tariffs may incentivize local investment, they also risk hindering innovation and research, as companies might reduce their research efforts and budgets to offset any additional expenses.

Even before the tariff announcements, US imports of pharmaceutical products surged in the first quarter of 2025. As companies anticipated tariffs, there was a 70% increase in medicine imports and a 493% increase in basic pharmaceutical product imports.

However, several large manufacturers have said that their future exposure to tariffs may be limited. Many are already manufacturing drugs or constructing facilities in the US over the coming years, thereby qualifying for tariff exemptions. This includes European companies GlaxoSmithKline and Roche, who signalled their intent to expand US research and production. Nonetheless, given that global pharmaceutical companies operate across multiple countries, the additional tariffs could disrupt various parts of their complex supply chains.

Four prescriptions to strategically mitigate pharmaceutical tariff risks

Given the growing complexity of tariff impacts, pharmaceutical developers and manufacturers should evaluate their operations with the aim of protecting continuity, controlling costs, and maintaining patient access.

To more effectively navigate the challenges posed by pharmaceutical tariffs, businesses should consider:

1. Implementing cost-reduction strategies: Tariffs may increase drug development costs both directly, such as raising the cost of inputs, as well as indirectly by adding hidden costs such as higher customs fees, increased administrative burdens, and more complex import logistics. Conducting comprehensive reviews of your operations can help identify where costs can be reduced. Actions could include optimizing production processes, shifting toward domestically focused supply models, or investing in US-based manufacturing capabilities to reduce reliance on international suppliers. Bear in mind that any trade-offs could affect sustainability initiatives, product quality, skills availability, supplier concentration risks, and overall sourcing strategies.
2. Diversifying supply chains: For some products, where specific raw materials, components, and technologies may have only a limited number of global sources, geographic concentration can create critical vulnerabilities. Reducing reliance on specific countries or suppliers subject to higher tariffs can help mitigate risks associated with geopolitical tensions and supply chain disruptions. Diversifying your supply chains may include adopting a multi-region supply strategy, partnering with suppliers in different geographies, and nearshoring or reshoring production to reduce dependence on single sources or regions.
3. Assessing risks: Given the unpredictability of global trade policy, tariff-related disruptions could be considered as part of a trend of persistent disruption. For pharmaceutical companies, operational risks are particularly acute due to their supply chain complexity, often limited sourcing flexibility, specialized handling needs, long processes, and regulatory requirements. With the help of our specialists and using insights from Marsh McLennan’s Sentrisk supply chain visibility platform, pharmaceutical companies can analyze their exposure to tariff impacts and identify critical vulnerabilities. Furthermore, scenario modeling with our Tariff Simulator enables companies to quantify potential impacts on inventory, lead times, and production schedules, facilitating better-informed decision-making.
4. Implementing risk management solutions: Pursuing insurance solutions — for example, ones that include coverage for forms of business interruption risk resulting from physical loss or damage — can potentially mitigate the associated impacts of trade- and tariff-related risks. Using a risk management framework can also help organizations better anticipate, prepare for, and respond to changes.

Immunizing your business

Tariffs pose a complex and evolving challenge for the pharmaceutical and healthcare industries, with significant potential implications for costs, supply chains, and patient health. Successfully navigating this landscape requires strategic foresight, collaboration, and resilience.

Marsh is ready to support pharmaceutical companies in understanding and mitigating tariff risks through advanced analytics, specialized risk advisory, and tailored insurance solutions. By understanding the risks and implementing proactive mitigation strategies, stakeholders can better help safeguard the integrity and safety of healthcare in an uncertain global environment.