Americans will suffer the most if Donald Trump imposes tariffs on drug imports. Drugs will be more expensive and potentially affordable for some people, drugmakers warn.
After the US president threatened to be attacked by the sector and released a survey last month, drugmakers are backed by targeted border taxes, as well as a 25% tax on steel, aluminum and automobile imports. Last week, Trump suggested a possible corporate responsibilities and said they would be given time to move the operation to the US, but “then it becomes a tariff barrier and they are not satisfied with it,” he added.
Giovanni Barbel, global head of strategy and supply chains for Swiss multinational Sandoz, said tariffs will lead to supply disruptions and medium-term prices, hitting US patients the most violently. Sandoz is one of the world’s largest manufacturers of common drugs. This is an inexpensive version of a branded drug with patents expired. Most prescription drugs sold worldwide are generics.
“We produce our products at very strict margins,” Barbell said. “That’s the nature of our industry. So, ultimately, production costs, including tariff costs, are higher and prices.”
He added: “There’s even more supply disruptions as some players can leave the (US) market and focus on a market where they can do more business. Ultimately, the risk is what US patients suffer most.”
There is already a sustained drug shortage in the US, UK and elsewhere, and tariffs can exacerbate it by disrupting long, complex global supply chains.
“We’ve seen a lot of money on drugs and drugs,” said Mark Samuels, CEO of Drug UK, which represents a UK-based generic drug manufacturer.
A 25% US tariff on drug imports increases the country’s drug costs by approximately $51 billion (£38 billion) per year, and if passed, it increases by up to 12.9%.
In an effort to get away from looming tariffs, Swiss drugmakers Roche and Novartis are investing $50 billion and $23 billion, respectively, over the next few years. UK AstraZeneca announced its $3.5 billion investment in November, saying last week it was shifting production of several drugs sold from Europe to the US. Eli Lilly, the US company of Mounjaro and Zepbound, a manufacturer of diabetes and obesity drugs, is spending at least $27 billion to build four new manufacturing sites in the United States.
Johnson & Johnson will invest $55 billion in US manufacturing and research over the next four years. The New Jersey-based company is more vulnerable to US tariffs as it is heavily manufactured across Europe, including the UK, Ireland, Switzerland, Italy and Belgium.
Sandoz said pharmaceutical companies could move higher prices of their products to the US, but it was much more difficult for a typical drugmaker to do so. The medicines they make are cheap – the cost of a small pack of paracetemol from 37p in UK supermarkets – and the companies operate at a more severe profit margin.
Approximately a quarter of generic drugs prescribed by the NHS are made in the UK, with the third coming from India and the rest from the EU.
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Sandoz produces major antibiotic substances such as amoxicillin in its own locations in Austria, Spain and Slovenia, and produces Austrian finished products. For other drugs, they source the active ingredients from suppliers in India or China and manufacture finished products in Poland, Germany and Türkiye.
The packaging is manufactured in Poland and Slovenia. The company also has a US-approved site for India that produces final products and packaging, and a Brazilian site that produces for local markets.
For biopharmaceuticals derived from biological organisms, Sand sources major substances from former European parent company Novartis, but it builds its own manufacturing site in Slovenia.
Gareth Sheridan, chief executive of Nutriband, a drug company registered with the Nasdaq set up in Ireland, warns that tariffs could result in loss of life.
“These types of treatments cannot afford to pay for the disruption in the global supply chain,” he recently told the BBC. “A comparable situation is, you’re involved in a car. Can’t afford a BMW? You can even work if you buy a Ford. If there’s a 25% increase in chemotherapy and you can’t afford a treatment, what’s the alternative? Ultimately, people will die.”