Geopolitical Risks and Market Shifts: The Impact of U.S. Disengagement from Global Health Agreements

The U.S. withdrawal from the World Health Organization (WHO) in 2025, under President Donald Trump, has reshaped global health governance and triggered significant market implications. This decision, rooted in geopolitical and ideological shifts, has disrupted long-standing international collaborations and recalibrated the pharmaceutical and biotech sectors. Investors now face a landscape where geopolitical risks intersect with public health policy, creating both challenges and opportunities.

The Financial and Operational Fallout from U.S. Disengagement

The U.S. was historically the largest contributor to the WHO, providing 22% of mandatory funding during the 2024–2025 periodThe United States Withdrawal From the World Health Organization^[1]. Its withdrawal has created a $1.2 billion annual shortfall, forcing the WHO to scale back critical programs such as pandemic preparedness and vaccine distributionRepercussions of a U.S. withdrawal from WHO will^[2]. This financial vacuum has weakened the organization's ability to coordinate global health responses, particularly in low- and middle-income countries (LMICs), where U.S.-funded initiatives were pivotal for disease surveillance and drug accessThe Consequences of the U.S.’s Withdrawal from the WHO^[3].

The ripple effects extend to pharmaceutical companies. Firms like Moderna and Pfizer, which relied on U.S.-supported WHO collaborations for vaccine R&D, saw sharp declines in share prices following the withdrawalThe U.S. Withdraws From the World Health Organization^[4]. Conversely, U.S.-based pharmaceutical giants with domestic-focused strategies have gained market share, consolidating their dominance amid fragmented global effortsPotential impacts of the US withdrawal from the WHO^[5].

Supply Chain Reconfiguration and Tariff Pressures

The U.S. withdrawal has accelerated shifts in pharmaceutical supply chains. With reduced WHO coordination, companies are diversifying sourcing strategies to mitigate risks. For example, 30% of FDA-approved drug workflows previously outsourced to Chinese contract manufacturers are now under scrutiny, prompting calls for reshoring and diversificationStrategically De-Risking U.S. Drug Supply Chains^[6].

Simultaneously, new tariffs on pharmaceutical imports—capped at 15% after EU negotiations—have introduced volatility. These policies risk inflating drug prices and disrupting access to active pharmaceutical ingredients (APIs) from China and IndiaTariff Update: Impact on Pharmaceuticals and Patient Access^[7]. Companies like Amgen and Gilead Sciences are recalibrating R&D budgets and manufacturing plans to navigate these uncertaintiesPharma and life sciences: US Deals 2025 midyear outlook^[8].

Biotech Sector Volatility and Strategic Adjustments

The biotech sector has faced prolonged capital outflows, with 42 of 52 weeks in 2024 recording net outflowsBiotech’s ‘Nauseating Roller Coaster’ Repels Investors^[9]. Regulatory uncertainty under the Trump administration, including stricter FDA oversight and Robert F. Kennedy Jr.'s controversial policies, has deepened investor cautionInnovationRx: The Impact Of Trump’s Withdrawal From The WHO^[10]. However, innovation in mRNA vaccines and AI-driven drug discovery offers potential catalysts for recovery.

M&A activity, though subdued, remains a key growth avenue. Notable deals, such as Gilead's $4.43 billion acquisition of CymaBay Therapeutics, highlight the sector's focus on pipeline expansionFrom Underperformance to Opportunity: Biotech's Case for 2025^[11]. Yet, the Inflation Reduction Act and evolving tariff policies continue to complicate valuation models and revenue forecastsBiopharma Industry Outlook 2025: Trends Signaling a Recovery^[12].

Investor Implications and Future Outlook

The U.S. disengagement from global health agreements underscores the growing interplay between geopolitics and market dynamics. Investors must now weigh the risks of fragmented international cooperation against opportunities in domestic-focused pharmaceuticals and resilient biotech innovators.

For the pharmaceutical sector, the shift toward supply chain resilience and AI-driven R&D will likely dominate strategic priorities. Meanwhile, biotech firms with robust pipelines and adaptive capital structures may outperform in a high-interest-rate environmentEY 2025 Biotech Beyond Borders Report^[13].

As global health governance evolves, the absence of U.S. leadership has created a vacuum that private philanthropies and emerging economies are seeking to fill. This transition raises questions about transparency and equity in global health funding—a dynamic that could further influence market sentiment and regulatory landscapesU.S. Withdrawal From WHO: Global Health and Security Implications^[14].