US-EU trade deal puts pharma industry at substantial fiscal risk: GlobalData
The imposition of tariffs threatens to elevate costs, creating uncertainty in launch planning, particularly for late-stage assets with EU-based manufacturing and production planned for entry into the US
For the first time in decades, the pharmaceutical industry has been directly affected by a geopolitical trade negotiation between the US and the EU. On July 27, 2025, the US government announced a 15 per cent tariff on branded pharmaceutical products imported from the EU. The trade deal puts the pharmaceutical industry at a substantial fiscal risk, with consequences that extend beyond short-term financials, says GlobalData.
The trade deal disrupts a long-established practice of the exemption of medicines from tariffs due to their importance in public health. It will force pharmaceutical companies to make a trade-off between tightening their profit margins or increasing drug prices, with both paths posing a risk to patient access and payer relations.
The imposition of tariffs threatens to elevate costs across the pharmaceutical value chain, creating uncertainty in launch planning, particularly for late-stage assets with EU-based manufacturing and production planned for entry into the US.
Analysts at Pharma Strategic Intelligence team, GlobalData, comment, “Companies manufacturing pharmaceutical products in Europe will need to anticipate financial exposure when planning launches in the US due to the unfavourable gross to net dynamics, weakened pricing leverage with US payers, and slower commercial uptake as insurers reassess cost effectiveness due to the tariffs.”
R&D budgets of pharmaceutical companies are already under pressure and may be further strained as they may have to divert budget to firefight the impact on the tariffs. This could hinder innovation and pipeline investment, reducing the much-needed pace of therapeutic innovation across the industry.
Earlier in the year, the US did signal tariffs for pharmaceuticals, which was met with proactive US investment from leading pharmaceutical companies to onshore manufacturing in the US to reduce exposure. In recent months, several pharmaceutical giants, including Johnson & Johnson and AstraZeneca, have significantly invested to strengthen their US manufacturing positions.
The team concludes, “Ultimately, the recent US-EU trade deal has increased the level of uncertainty within the pharmaceutical industry, raising concerns on the potential of tariffs increasing past 15 per cent in the future. A once shielded sector is facing a geopolitical shift, leaving the pharmaceutical industry vulnerable to global volatility. While the full impact will take time to unfold, it will be interesting to see the adoption of different strategies on how the pharmaceutical industry looks to balance innovation, and ensuring patient access, while managing the pressures of tariffs as they unfold into a certain reality.”
Hannah Hans, Head, Pharma Strategic Intelligence; Wafaa Hassan, Senior Analyst; Gaffar Aga, Analyst; and George El-Helou, Analyst, at GlobalData, contributed to the Press Release