The Impact of Trump's 100% Pharma Tariffs on U.S. Biotech Firms

The Trump administration's 100% tariff on branded and patented pharmaceutical imports, effective October 1, 2025, has ignited a seismic shift in the U.S. biotech landscape. This policy, designed to force pharmaceutical companies to reshore manufacturing or face crippling costs, has accelerated a wave of domestic investment. For investors, the focus now turns to how firms like Eli Lilly and Amgen are navigating these pressures—and whether their strategies position them as long-term winners in a reshaped industry.

Strategic Resilience: Eli Lilly's Reshoring Gambit

Eli Lilly has emerged as a poster child for Trump's “Made in America” agenda. In February 2025, the company announced a $27 billion investment to build four U.S. manufacturing “mega-sites,” including a $5 billion facility in Virginia to produce active pharmaceutical ingredients (APIs) for advanced therapiesLilly unveils $27bn reshoring drive around four new plants^[1]. This follows a broader $50 billion expansion since 2020, with three sites dedicated to APIs and one to injectable medicines, including its blockbuster weight-loss drug MounjaroEli Lilly backs Trump's ^[3].

According to a report by Pharmaphorum, Lilly's CEO David Ricks emphasized that the 2017 tax cuts were “fundamental” to these investments, enabling the company to avoid the 100% tariff by qualifying for the “construction in progress” exemptionEli Lilly backs Trump's ^[3]. The new facilities are projected to create 3,000 skilled jobs and 10,000 construction jobs, aligning with Trump's goal of reducing reliance on foreign suppliers, particularly China, which currently dominates API productionAmgen unveils plans for $600M R&D site in California^[4].

However, challenges remain. Analysts at Investing.com note that reshoring is a multiyear endeavor, with pharmaceutical manufacturing requiring 5–10 years and billions in capital to achieve scaleLilly unveils $27bn reshoring drive around four new plants^[1]. For Lilly, the immediate risk lies in balancing near-term costs with long-term gains, but its aggressive domestic footprint suggests a strong hedge against future tariff escalations.

Amgen's Dual-Pronged Approach: Manufacturing and R&D

Amgen, another industry giant, is adopting a complementary strategy. In 2025, the company announced a $900 million expansion of its Ohio manufacturing facility, bringing total investment in the region to $1.4 billion and creating 750 U.S. jobsLilly unveils $27bn reshoring drive around four new plants^[1]. Simultaneously, Amgen is investing $1 billion in a second biologics manufacturing site in North Carolina, enhancing its global supply chain resilienceTrump pharma tariffs would raise U.S. drug costs by $51 billion^[2].

Beyond manufacturing, Amgen is doubling down on R&D. A September 2025 press release revealed a $600 million investment in a new science and innovation center in California, leveraging automation and digital tools to accelerate drug discoveryAmgen unveils plans for $600M R&D site in California^[4]. This dual focus on production and innovation positions Amgen to mitigate supply chain risks while maintaining its competitive edge in high-margin biologics.

Data from Biospace highlights that Amgen's domestic investments are partly driven by tax incentives like the 2017 Tax Cuts and Jobs Act and the anticipated benefits of the One Big Beautiful Bill Act of 2025Amgen unveils plans for $600M R&D site in California^[4]. Yet, unlike Lilly, Amgen's reliance on global operations—particularly in Europe—means it remains partially exposed to tariff-related volatility.

Broader Industry Implications and Investment Risks

While Lilly and Amgen are well-positioned, the tariffs' broader impact is mixed. According to a CNBC analysis, the policy could raise U.S. drug costs by $51 billion annually, driven by higher production costs and reduced competitionTrump pharma tariffs would raise U.S. drug costs by $51 billion^[2]. Smaller biotech firms and generic drugmakers, which lack the capital to reshore, face existential risks. For example, 94% of U.S. biotech companies rely on imported materials for at least half of their FDA-approved products, with many anticipating a 4.1% rise in domestic manufacturing costs due to tariffsLilly unveils $27bn reshoring drive around four new plants^[1].

The European Union, which has secured a 15% tariff cap on pharmaceutical exports, appears shielded from the full brunt of Trump's policyTrump pharma tariffs would raise U.S. drug costs by $51 billion^[2]. This creates a two-tiered system where U.S.-focused firms like Lilly benefit, while global players such as Roche and Novartis face potential annual losses from foreign manufacturing exposureLilly unveils $27bn reshoring drive around four new plants^[1].

Long-Term Investment Opportunities

For investors, the key lies in identifying companies with both domestic manufacturing scale and R&D agility. Lilly's $50 billion reshoring push and Amgen's $2.4 billion in U.S. manufacturing investments since 2020Lilly unveils $27bn reshoring drive around four new plants^[1] suggest robust resilience. Additionally, firms with strong U.S. production bases—such as Vertex Pharmaceuticals and AbbVie—are likely to outperform in this environmentLilly unveils $27bn reshoring drive around four new plants^[1].

Conversely, companies like Amgen and Roche, which maintain significant offshore operations, may struggle to absorb tariff-related costs without passing them on to consumers. This could lead to margin compression and increased regulatory scrutiny over drug pricing.

Conclusion

Trump's 100% pharma tariffs are reshaping the industry's competitive dynamics, favoring firms that have proactively reshored production. Eli Lilly and Amgen exemplify how strategic investments in U.S. manufacturing and R&D can mitigate regulatory risks while capturing long-term value. However, investors must remain cautious about sector-wide inflationary pressures and the uneven impact on smaller players. As the administration's national security investigation into pharmaceutical imports loomsTrump pharma tariffs would raise U.S. drug costs by $51 billion^[2], the next phase of this policy could further redefine the landscape—making agility and foresight critical for sustained success.