Trump announces 100% tariffs on brand-name pharmaceutical imports effective Oct 1, with exemptions for companies building US manufacturing plants.
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.
Industry Response and Investment Commitments
Drugmakers have taken Trump’s tariff threats seriously, unveiling hundreds of billions of dollars of commitments to build or expand US manufacturing operations in the coming years.
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.
Recent major announcements include:
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.
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%.
PhRMA Warns of Investment Risks
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.
Global Supply Chain Implications
Despite the push for domestic manufacturing, experts note that pharmaceutical production remains inherently global. The pharmaceutical industry operates as a global web, with ingredients and finished drugs manufactured in multiple locations worldwide.
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.
Broader Trade Policy Context
The pharmaceutical tariff builds on Trump’s previous trade initiatives. In late July, Trump unveiled the framework of a deal with the European Union, calling for a 15% tariff on pharmaceutical imports with exemptions for generic drugs. The administration has yet to release findings from its investigation into national security implications of drug imports.
Implementation Timeline and Outlook
With less than a week until the October 1 deadline, pharmaceutical companies face immediate pressure to demonstrate active construction projects to avoid the tariffs. However, it can take time to put shovels in the ground, and Eli Lilly noted it could take up to five years for new plants to become operational.
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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