Although President Donald Trump’s “Liberation Day” tariffs have spared pharmaceuticals, potential drug-specific import taxes remain a sword of Damocles that have spurred anxiety among biopharma leaders, who now fear that more than $100 billion in investments could leave the European Union.
Unless Europe delivers “rapid, radical policy change,” pharmaceutical R&D and manufacturing is “increasingly likely to be directed towards the U.S.,” pharma CEOs in the European Federation of Pharmaceutical Industries and Associations (EFPIA) warned European Commission President Ursula von der Leyen Tuesday.
About 16.5 billion euros ($18 billion) worth of biopharma investment in the EU-27 territories could be at risk within just the next three months, EFPIA said, citing a CEO survey conducted last week among the leaders of 18 large and medium-sized innovative biopharma companies.
For the five years between 2025 and 2029, as much as 103.2 billion euros ($113 billion) of planned capital and R&D expenditures in EU’s biopharma sector could leave the region, according to EFPIA. That’s a majority proportion of the 164.8 billion in total spend expected from the drug industry in the area during the period.
To help Europe keep the pharma industry, the CEOs called for several actions, including strengthening the region's competitive commercial market, intellectual property protections, regulatory framework and policy coherence.
However, the list runs short of specific suggestions on how EU may deal with potential U.S. tariffs on pharmaceuticals, even though EFPIA noted that the addition of tariffs translates to “little incentive to invest in the EU and significant drivers to relocate to the U.S.”
Trump’s sweeping reciprocal tariffs, unveiled on April 2, include duties of 20% on the EU but appear to have excluded pharmaceuticals. Nevertheless, pharmaceutical-specific tariffs look to be a question of when, not if, because Trump has repeatedly threatened tariffs targeting medicines both in public and during a private White House meeting with several pharma executives in February.
Trump previously floated a 25% or higher levy on pharma imports, although a Reuters report last week suggested that drugmakers are lobbying the President to phase in such tariffs in stages.
The EU has become an attractive location for biopharma companies to process their medical products and store intellectual property. A February survey by the trade group the Biotechnology Innovation Organization found that 94% of companies polled expect tariffs on the EU to drive up manufacturing costs, and that half of the firms would have to search for new research and manufacturing partners if Trump rolls out pharma tariffs on the European territory.
Trump has singled out Ireland, an EU member, lamenting at how the country has used tax incentives to lure pharma companies.
“All of a sudden, Ireland has our pharmaceutical companies, this beautiful island of five million people has got the entire U.S. pharmaceutical industry in its grasp,” Trump said during a March meeting with Ireland’s leader Micheál Martin at the White House.
A Fierce Pharma examination of public records shows that most large pharmaceutical companies have manufacturing operations in Ireland, with some exceptions such as Novartis.
Meanwhile, Ireland’s neighbor, the U.K., which is no longer an EU member, is working to shore up pharma investments. U.K. Prime Minister said on Monday that he would cut red tape to enable clinical trials to be set up within 150 days rather than 250 days on average, The Guardian reports. However, the pharma industry has bigger issues with the British government in the form of growing drug price controls.
Outside of Europe, China has also been a major supplier of pharmaceuticals to the United States. Tariffs on China-made pharmaceuticals would increase production costs for 70% of companies that responded to BIO’s February survey.
After China unveiled 34% reciprocal tariffs on all imports from the U.S.—without exemptions—and a vow to “fight to the end,” Jefferies analysts figured that the Trump administration is likely to impose tariffs on medicines from China very soon.
The Jefferies team also saw little impact on the Chinese biotech industry from any potential U.S. pharma tariffs because most local firms have U.S. partners.