J&J, AstraZeneca, Novo Nordisk and Roche are among the companies that might take a hit from the soon-to-be-enacted fees, according to analysts.
In keeping with his election promise, President Donald Trump over the weekend announced steep tariffs on Canada, Mexico and China. Starting Tuesday, Feb. 4, imports from Canada and Mexico will be subjected to a 25% tariff, while China will be hit with a 10% tariff.
According to a press release from the White House, the tariffs are meant to target the “extraordinary threat posed by illegal aliens and drugs” from these countries, saying these constitute a “national emergency” for the U.S., though he did not provide further detail.
The levies against China in particular could cause problems for biopharma, particularly as the industry is “increasingly looking to China to find promising new drug candidates,” according to Seeking Alpha analyst Edmund Ingham. This trend is evidenced by a recent flurry of licensing deals with Chinese biotechs, with 10 such transactions last year alone—more than each of the previous four years.
Experts previously told BioSpace that they expected the biopharma industry to be largely protected from such tariffs, though some, including Gilead CFO Andrew Dickinson, said caution is warranted in discussions with Chinese biotechs.
Ingham added that China has also become a major supplier of active pharmaceutical ingredients. “Tariffs may lead to more ‘re-shoring’—building manufacturing plants in the U.S., which is a change that will affect every Big Pharma,” he explained in the Seeking Alpha report.
Association for Accessible Medicines CEO John Murphy pointed to the impact the tariffs could have on existing drug shortages.
“The global supply chain for generic and biosimilar medicines is critically important for U.S. patients. From the base ingredients to the finished products, U.S. medicines rely on a global supply chain that is already stressed and in need of strengthening,” he said in a statement. “Tariffs on products from Canada, Mexico, and China could increase already problematic drug shortages.”
The Healthcare Distribution Alliance emphasized the same concern, even calling for Trump to consider excluding pharma products from the tariffs.
Of the largest pharma manufacturers, Johnson & Johnson and AstraZeneca could be especially hamstrung by Trump’s tariff because they work closely with Chinese firms, Ingham noted. J&J, for instance, is partnered with Nanjing-based Legend Biotech, with which it co-developed and co-commercializes the CAR T therapy Carvykti. Meanwhile, AstraZeneca in December 2023 acquired the Chinese cell therapy specialist Gracell Biotechnologies for $1 billion upfront.
The tariffs could also affect European pharma companies, Seeking Alpha analyst Stephen Ayers added, noting that firms such as Novo Nordisk and Roche “could face significant impacts” because they “manufacture drugs overseas,” and Trump’s new duties could affect profitability.
“Tariffs on imports would increase the total cost of goods sold and reduce margins,” Ayers explained in the report, cautioning that these companies could potentially try to absorb these extra costs by passing them off to consumers—in turn raising drug and healthcare costs. “While this may happen to some extent, increasing the product’s cost is likely to result in lower demand,” he said.
In contrast, ONeil Trader, another analyst at Seeking Alpha, was a bit more tempered in his take, noting in the report that while some Europe-based companies could be disproportionately affected by the tariffs, “I do not expect to see a meaningful impact of higher tariffs on any Big Pharma company.” These established players, he argued, have “geographically diversified supply chains” that they can activate and adapt to mitigate impacts of the tariffs.
“We have seen an expansion of the number of manufacturing facilities in the United States in recent years, and I expect these trends to accelerate” in light of the tariffs, Trader said.
