U.S. drug industry faces unexpected disruptions due to erratic tariff policies
In a significant shift, several pharmaceutical companies have announced multi-billion dollar investments in the United States, despite ongoing uncertainty surrounding tariffs.
Pfizer, a leading pharmaceutical company, has made substantial investments in Ireland in recent years. However, the company, along with others, is now looking to the US market.
Johnson & Johnson has pledged to invest more than $55 billion into the US over the next four years. This announcement follows similar commitments from Roche, who has pledged $50 billion over the next five years, and Eli Lilly, who plans to double its US manufacturing investment to above $50 billion since 2020.
Novartis has announced plans to invest $23 billion into 10 facilities in the US, including seven new projects. AstraZeneca has also made a significant commitment, pledging to invest $50 billion by 2030, with promises of creating tens of thousands of jobs and a $3.5 billion manufacturing facility in Virginia.
These investments come amidst an ongoing investigation by the Trump administration under Section 232 of the Trade Expansion Act of 1962, which is investigating pharmaceuticals and pharmaceutical ingredients. The investigation aims to determine whether imports pose a threat to US national security.
The US tariffs on pharmaceuticals are intended to reduce trade deficits and encourage more domestic manufacturing. However, a federal court ruled that the current across-the-board tariffs are illegal, although they will remain in place until mid-October, allowing time for an appeal to the Supreme Court. A final ruling on the legality of the tariffs could be many months away.
India, the world leader in manufacturing pharmaceutical active ingredients, supplies large volumes of generic medicines to the US. If tariffs are imposed on pharmaceutical products from India, there could be severe consequences, including potential disruptions to ingredient exports and supply chains.
The UK and US announced a similar 'economic prosperity deal' in May, with a commitment to negotiate a preferential agreement on pharmaceuticals. However, many firms may be hesitant to invest in the US due to long-term uncertainties around US trade policy.
The Irish Pharmaceutical Healthcare Association (IPHA) represents companies like Pfizer, GSK, Novartis, Amgen, J&J, and Bristol-Myers Squibb. Official statistics show exports of medical and pharmaceutical products to the US from Ireland for January to May 2025 were €70.8 billion (£61.3 billion). Since January, Irish pharmaceutical exports to the US have surged by 153%.
Despite these investments, there is skepticism about whether these pledges will result in significant changes in underlying strategy. The potential for manufacturing to return to the US is limited to certain high-tech, chemical, and pharmaceutical sectors.
In a separate development, Ursula von der Leyen, the European Commission President, announced an agreement in which the US imposed a 15% tariff on most EU goods, including pharmaceuticals. This move could have significant implications for the European pharmaceutical industry.
As the situation evolves, it remains to be seen how these investments will impact the pharmaceutical industry in both the US and Europe.
