FDA hemorrhaging staff while promising to fast-track advanced modalities. BIOSECURE Act signed into law with five-year phase-out timelines. Tariffs creating 50% cost increases on manufacturing equipment. Most Favored Nation deals cutting prices. Cell and gene therapy facilities closing despite scientific promise. Welcome to 2026 pharma manufacturing.
In the latest episode of the PharmaSource podcast, Gil Roth, President of the Pharma and Biopharma Outsourcing Association (PBOA), explains how pharma companies are impacted by policy changes, and how CDMOs are building flexibility into capital planning, manufacturing infrastructure, and customer contracts to survive chaos that makes forecasting impossible.
FDA Staff Exodus Degrades Review Infrastructure
FDA staff cuts through 2025 removed institutional knowledge. The Department of Government Efficiency (DOGE) initiative, early retirements, and reductions in force in February and April 2025 depleted experienced reviewers.
“A lot of people were fired. The commissioner keeps talking about hiring 450 people, but a lot of people who left had institutional knowledge,” Gil says.
Morale inside FDA deteriorated after the head of the Centre for Drug Evaluation and Research, Dr. Richard Pazdur, quit three weeks into his tenure. “Reportedly, the commissioner wanted to fire a career FDA staffer because she gave him the wrong answer in a meeting. Pazdur refused and took retirement. She was reassigned to a division where she has no background,” Gil explains.
Drug reviews held up in 2025, but cracks emerged. FDA extended review timelines by three months instead of meeting standard PDUFA (Prescription Drug User Fee Act) goal dates. Complete response letters became more “ticky tack”—issues that could have been handled through reviewer discussions now trigger full review cycles.
Cell and gene therapy applications face new hurdles. “We’ve seen companies that thought they were on a glide path for approval based on ongoing meetings with FDA. They’ve now been told their clinical data is not usable and they’ll need to conduct more trials,” Gil says.
The impact hits CDMOs indirectly. “If you were supposed to contract manufacture that cell or gene therapy product and discover it’s three or four more years before approval, that changes your business model.”
BIOSECURE Act and Tariffs Create Supply Chain Uncertainty
The BIOSECURE Act phases out Chinese manufacturing partners over five years. Sponsors can continue existing contracts through 2032 but must prove partners don’t pose national security risks. “If you’re a small biotech with a Chinese CDMO partner, finding a new one is going to be expensive and time consuming,” Gil explains.
Tariff volatility compounds planning challenges. “Much of the equipment pharma uses for manufacturing comes from overseas. Volatility in tariffs impacts drug supply chain security,” he says.
CDMOs face capital planning paralysis. “Some might hold back on significant capital investments if they don’t know what equipment will cost. Increasing day-to-day operation costs because key components now cost 50% more affects how CDMOs contract with customers.”
Tariff exemptions attached to most favored nation deals create unpredictable dynamics. “Many exemptions are tied to purchasing agreements—if you sell it to us at the best price, we’ll give you a lower tariff on everything you’re making.”
Drug Pricing Policy Reshapes CDMO Business Models
The Inflation Reduction Act favors biologics over small molecules and incentivizes large market entry from the outset.
“It disincentivizes getting small patient population approval just to get on market and then expanding with other trials,” Gil explains. “The moment you get on market, the fuse is lit for when Medicare can begin negotiating prices. You now want to make a hit right away. You might ignore small patient populations.”
That pressure undermines the traditional CDMO scale-up model. “If you were planning to start with a smaller population and scale up when you get approvals, that model is under pressure.”
Post-COVID interest rate increases damaged R&D investment. “When it became riskier than just putting money in a CD, it became very tough for CDMOs that relied on earlier stage pharma.”
Manufacturing Strategy: Build Flexibility Into Everything
Gil explains how contract manufacturing organziations are taking on private equity funding to weather volatility. “Part of that is to have more backing to accommodate ups and downs, but also answer questions like: is equipment going to cost 10% more or 50% more based on where tariffs end up?”
Cell and gene therapy infrastructure faces overcapacity. “There have been closures of cell and gene facilities owned by CDMOs because the market just has not caught up to where the science is,” Gil notes. “Over time those modalities will come through, but maybe not fast enough for where investors thought.”
Reimbursement challenges stall adoption. “Some cell therapies cost too much for the UK to accept and aren’t available there. Understanding how to fix the economics and keep infrastructure in place to survive slower than expected market approval is a real challenge.”
Despite the chaos, opportunities exist. GLP-1 injectables created bottlenecks that are now opening. “Things displaced because of GLP-1s are landing at other injectable CDMOs. With potential oral GLP-1s, that’s going to change what services and modalities are needed.”
Gil’s outlook balances caution with pragmatism. “We’re here to support all that, knowing we’re not the guys in charge. We don’t own the drugs or licences, but we’re here to support as best we can.”
Gil Roth is speaking at CDMO Live Europe and CDMO Live Americas
