Home > Information > News

Trade War Escalation: Why Are Multinational Pharmaceutical Giants Becoming the "Fish in the Pond"?

MedTrend Medical Trends 2025-03-20 09:38:01

In March, trade disputes between Europe and America are spreading from traditional manufacturing to the medical field.

When the US government imposed a 25% tariff on EU steel and aluminum products, and the EU responded with a countermeasure list worth 26 billion euros, multinational pharmaceutical companies unexpectedly became the 'hostages' in this game.

From Novo Nordisk's weight loss wonder drug Wegovy to Merck's cancer therapy Keytruda, these blockbuster drugs with annual sales exceeding tens of billions of dollars are facing the risk of supply chain disruption due to tariffs.

tariff shock under deep supply chain integration

Novo Nordisk's Wegovy production line in Denmark and Merck's Keytruda factory in Ireland annually supply the U.S. with medicines worth over hundreds of billions of dollars.

Once the tariffs are implemented, the final prices of these drugs may increase by 15%-30%, directly impacting the U.S. federal Medicare system.

As Redburn Atlantic analyst Baker put it: 'When the U.S. government becomes the biggest buyer, tariffs ultimately become a burden on taxpayers.'

This supply chain dependency stems from Europe's long-term dominance in high-end drug production, leveraging mature biopharmaceutical technology and a well-established regulatory system; the United States, on the other hand, focuses on research and development as well as the market end.

Taking monoclonal antibody drugs as an example, 70% of the global biopharmaceutical raw materials are produced in Europe, and the US market consumes 40% of that production capacity.

This deep binding makes tariff policies have a very strong transmission effect, with any increase in costs at any stage quickly spreading to the end market.

Pharmaceutical companies' breakthroughs and dilemmas

Facing tariff threats, multinational pharmaceutical companies are in a dilemma.

On one hand, they lobby collectively through the industry organization PhRMA, emphasizing that tariffs would directly contradict the U.S. government's policy goals of lowering drug prices and improving national health.

On the other hand, companies have had to activate contingency plans: Novo Nordisk announced an additional $4.1 billion investment to expand its North Carolina plant, and Eli Lilly is accelerating the transfer of its European production lines to Mexico.

But how easy is it to reconstruct the supply chain?

Industry calculations show that building a new biopharmaceutical factory that meets FDA standards in the United States takes 5-10 years and costs up to $2 billion.

More seriously, shifting production means squeezing out R&D funding. As one European pharmaceutical executive put it: 'We are fixing a problem that did not exist.'

This dilemma highlights the industrial paradox of the globalization era: the supply chain networks established by companies for efficiency become vulnerable links in political games.

When the Trump administration pushed for the return of manufacturing under the guise of 'America First', the high technical barriers and long cycle characteristics of the pharmaceutical industry made it difficult to respond quickly to policy shifts like traditional industries.

【Copyright and Disclaimer】The above information is collected and organized by PlastMatch. The copyright belongs to the original author. This article is reprinted for the purpose of providing more information, and it does not imply that PlastMatch endorses the views expressed in the article or guarantees its accuracy. If there are any errors in the source attribution or if your legitimate rights have been infringed, please contact us, and we will promptly correct or remove the content. If other media, websites, or individuals use the aforementioned content, they must clearly indicate the original source and origin of the work and assume legal responsibility on their own.

Trade War Escalation: Why Are Multinational Pharmaceutical Giants Becoming the "Fish in the Pond"?

tariff shock under deep supply chain integration

Pharmaceutical companies' breakthroughs and dilemmas

Most Popular