- Trump announced 100% tariffs on brand-name pharmaceutical imports effective Oct 1, with exemptions for companies building US manufacturing plants.
- Over $351 Billion has been pledged by pharma companies to invest in the United States since January 2025.
- Germany and the European Commission are signalling confidence in an existing 15% cap, but with no detailed customs guidance businesses are bracing for possible disputes at the border once enforcement begins.
President Donald Trump announced on September 26 that brand-name and patented pharmaceutical products will face a 100% tariff beginning October 1, unless drugmakers are actively constructing manufacturing facilities in the United States. The sweeping tariff policy represents the administration’s most aggressive move yet to pressure pharmaceutical companies into domestic production.
Manufacturing Construction Key to Tariff Exemption
In a post on Truth Social, Trump defined “building” as “‘breaking ground’ and/or ‘under construction,'” stating there would be “no Tariff on these Pharmaceutical Products if construction has started.” The policy specifically targets branded or patented drugs, leaving generic pharmaceutical imports unaffected for now.
The tariff announcement came alongside other trade measures, including levies on kitchen cabinets, furniture, and heavy trucks, signaling broader protectionist policies across multiple industries.
$351+ Billion Investment Commitments
Drugmakers have taken Trump’s tariff threats seriously, unveiling over $351 billion dollars of commitments to build or expand US manufacturing operations in the coming years.
U.S. pharma build/expansion pledges since Jan 2025, based on the public figures:
- Johnson & Johnson — $55 B
- Roche (incl. Genentech) — $50 B
- AstraZeneca — $50 B
- Bristol Myers Squibb — $40 B
- Takeda – $30 B
- GSK — $30 B
- Eli Lilly — $27 B
- Novartis — $23 B
- Sanofi — $20 B
- AbbVie — $10 B (includes smaller disclosed site expansions)
- Merck (MSD) — $9 B
- Gilead — $11 B
- UCB — ~$5 B (economic impact stated; exact capex not disclosed)
- Amgen — $0.9 B
Recent major announcements include:
Roche have said that its Genentech unit announced plans for a facility in Holly Springs, North Carolina last month. Roche has also made a $50bn pledge to invest in U.S. manufacturing and research and development.
Eli Lilly’s Expansion: The company plans to more than double U.S. manufacturing investment since 2020, exceeding $50 billion, with expectations to begin building four more domestic manufacturing sites this year and add 13,000 high-wage manufacturing and construction jobs. This week, Lilly announced a $6.5 billion manufacturing facility in Houston, following its $5 billion plant commitment outside Richmond, Virginia.
GSK’s US Commitment: GSK announced plans to invest $30 billion across the United States in research and development and supply chain infrastructure over the next five years, including $1.2 billion for new manufacturing facilities and a biologics factory in Pennsylvania.
Amgen’s Manufacturing Expansion: Amgen announced a $650 million expansion of its U.S. manufacturing network, creating nearly 750 jobs including construction roles and highly skilled manufacturing positions. The investment will support increased drug production at the company’s biologics manufacturing facility in Juncos, Puerto Rico, and integrate innovative advanced technologies throughout operations.
Industry Response and Concerns
Pharmaceutical companies and trade associations offered varied reactions to the tariff policy, from demonstrating compliance to expressing serious concerns about its potential consequences.
Novo Nordisk’s CEO Mike Doustdar, pointed to existing construction projects that would qualify for tariff exemptions.
“Right now, cranes are rising at Novo Nordisk’s U.S. manufacturing site in North Carolina.”
Mike Doustdar, CEO, Novo Nordisk
However, not all companies are in the same position. John Crowley, CEO of the Biotechnology Innovation Organization (BIO), warned that “The immediacy of punitive, 100% tariffs on innovative medicines for any company without ‘shovels in the ground’ would devastate our nation’s small and mid-sized biotechnology companies.”
The Pharmaceutical Research and Manufacturers of America (PhRMA) cautioned against the tariff approach.
“Tariffs risk those plans because every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures,”
Alex Schriver, senior vice president at PhRMA.
The industry association emphasized that medicines have previously been exempt from tariffs because of increased cost and shortage concerns.
Nathalie Moll, Director General of EFPIA (European Federation of Pharmaceutical Industries & Associations), emphasized patient impact.
“Tariffs increase costs, disrupt supply chains and prevent patients from getting life saving treatments.”
Nathalie Moll, Director General, EFPIA
Pascal Chan, Vice President of Strategic Policy & Supply Chains at the Canadian Chamber of Commerce, warned the tariff would:
“have profound and potentially dire consequences on Americans’ health … disrupting the supply chain with such a steep tariff would lead to immediate price hikes, strained insurance systems, hospital shortages, and the real risk of patients rationing or forgoing essential medicines.”
He added that some companies would find it “impossible” to relocate manufacturing to the United States quickly, given the bureaucracy and costs involved.
Global Supply Chain Implications
As pharmaceutical production remains inherently global, questions remain over how strictly rules-of-origin will be enforced, and whether biologics, intermediates, or products with complex supply chains might slip outside any tariff exemptions.
The U.S. has yet to publish detailed customs guidance, and it is not clear whether all branded or patented drugs will be treated consistently under the cap. Governments are interpreting how the new U.S. pharmaceutical tariffs will apply to their exporters.
Europe’s position: Germany has stated publicly that it expects the 15 % ceiling agreed under the U.S.–EU trade framework to hold, rather than the full 100 % tariff announced by President Trump. Officials in Berlin have linked this expectation to the deal reached earlier in 2025, which limited Section 232 tariffs on EU pharmaceuticals and certain industrial goods.
That framework established a maximum tariff rate of 15 % on “originating” EU goods, covering pharmaceuticals, semiconductors, and other sensitive products. In practice, this means EU-made drugs that meet rules-of-origin requirements should face tariffs far below the blanket 100 % level announced for other trading partners. The deal also specified that generic medicines and their ingredients would continue to benefit from near-zero most-favoured-nation (MFN) tariffs, further insulating a large portion of Europe’s pharmaceutical exports.
India’s Position: India supplies nearly 47% of required pharmaceuticals in the US, primarily generics, according to Namit Joshi, chairman of the Pharmaceutical Export Promotion Council of India, the tariff is
“unlikely to have an immediate impact on Indian exports,” since most large Indian companies already operate US manufacturing or repackaging units.
Market Impact Assessment
Shares in Europe’s largest drugmakers fell in early trading on Friday. Novo Nordisk, Roche, Novartis, and AstraZeneca were each down between 1.2% and 2.4% on the Tradegate platform. Pharmaceutical shares in Asia also slumped.
Industry analysts suggest the tariff’s actual impact may be limited. “The actual comment from the President is direct but its impact may be somewhere between nebulous and negligible,” Jared Holz, an analyst with Mizuho, noted, explaining that “All major players have some production presence domestically and almost all have announced increased investment directly tied towards local manufacturing.”
David Risinger, an analyst with Leerink Partners, wrote that the tariffs should not affect many larger pharmaceutical companies because they have construction projects underway, though it is difficult to determine which smaller manufacturers may face exposure.
While pharma companies are not explicitly stating investment reductions will be a result of US reshoring, this comparison of recent announcements of companies cancelling investment in the United Kingdom while increasing in the United States presents a stark contrast.
The UK is particularly impacted on account of the high medicine levy which forces companies to pay back 23.5%-35.6% of their NHS medicine revenues—compared to France’s 5.7%, Germany’s 7% and Ireland’s 9%.
What happens next?
With less than a week until the October 1 deadline, pharmaceutical companies face immediate pressure to understand the policy’s implications, while demonstrating active construction projects to avoid the tariffs.
The policy’s effectiveness in lowering drug costs remains questioned by experts, though it may succeed in accelerating the pharmaceutical industry’s shift toward increased US manufacturing capacity. The exclusion of generic drugs from tariff coverage suggests recognition of their role in maintaining affordable medication access and preventing potential shortages.
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