Biotech Tariff Concerns: Overblown or Real?

The biotech industry is no stranger to uncertainty, but the recent imposition of tariffs on pharmaceuticals and semiconductor chips from China, Canada, and the EU has sparked a new wave of concern. However, a closer look at the data suggests that the impact may not be as dire as some fear.



The Biotechnology Innovation Organization (BIO) survey released on April 1, 2025, paints a picture of an industry heavily reliant on imported components. Nearly 90% of U.S. biotech companies rely on imported components for at least half of their FDA-approved products. This heavy reliance on imports makes the supply of medicines for U.S. patients and families particularly vulnerable to proposed tariffs. The survey highlights several key impacts:

1. Increased Manufacturing Costs: A staggering 94% of biotech firms anticipate surging manufacturing costs if tariffs are placed on imports from the European Union. This increase in costs will directly affect the operational expenses of biotech companies, potentially leading to higher prices for consumers and reduced access to affordable medicines.

2. Disruption in Research and Development: Proposed tariffs on the EU would force 50% of companies to scramble for new research and manufacturing partners. Half of those surveyed say they would have to rework or potentially delay regulatory filings, jeopardizing the pace of innovation. This disruption could lead to delays in the development of new treatments and therapies, impacting the overall innovation pipeline.

3. Supply Chain Delays: In the face of sudden tariffs, 80% of biotech firms report needing at least 12 months to find alternative suppliers, and a remarkable 44% would require more than two years. These delays could disrupt the pipeline of breakthrough treatments, affecting the timely delivery of critical medications to patients.

However, the industry is not without options. Biotech companies can employ several strategies to mitigate these impacts:

1. Diversify Supply Chains: Companies can explore alternative manufacturing options and global manufacturing networks to reduce their dependence on a single region. For example, Chinese companies with significant manufacturing capabilities outside of China may be able to offer alternative solutions to mitigate the impact of these tariffs.

2. Invest in Domestic Manufacturing: Strengthening the American manufacturing base should be a high priority for both national and economic security. Re-onshoring key parts of the biotechnology supply chain to the U.S. and its allies can help reduce the vulnerability to tariffs and ensure a more stable supply of critical components.

3. Engage with Trade and Legal Professionals: Biotech companies should closely monitor developments in tariff policies and consider the potential impact on their supply chains and manufacturing costs. Engaging with trade and legal professionals can help companies independently assess the impact of these tariffs and explore possible exclusion requests or pre-existing tariff exemptions under other measures.

4. Proactive Risk Management: Companies can invest in proactive risk management strategies to reconfigure their resources and become more resilient to disruptions. This includes investing in risk-averting infrastructure and developing capabilities to quickly adapt to changes in the supply chain.

5. Collaborate with Policymakers: Working with the Administration and Congress to develop incentives and policies that drive private sector dollars to spur a renaissance of U.S. biotech manufacturing can help mitigate the negative consequences of proposed tariffs. This collaboration can lead to long-term solutions that support the growth and sustainability of the biotech industry.



The potential long-term effects of tariffs on the innovation and research capabilities of biotech companies are significant, particularly in terms of regulatory filings and the development of new treatments. According to the BIO survey, "Proposed tariffs on the EU would force 50% of companies to scramble for new research and manufacturing partners. Half of those surveyed say they would have to rework or potentially delay regulatory filings, jeopardizing the pace of innovation." This indicates that the disruption caused by tariffs could lead to delays in the development and approval of new treatments, as companies would need to find alternative suppliers and partners, which could take up to 12 months or more for 80% of biotech firms. This delay could have a cascading effect on the pipeline of breakthrough treatments, as "a remarkable 44% would require more than two years" to find alternative suppliers, further disrupting the development of new treatments. Additionally, the increased costs and delays could lead to a reduction in research and development (R&D) investments, as companies may need to allocate more resources to managing supply chain disruptions and increased production costs. This could potentially delay innovation and the market introduction of new therapies, as companies may have to prioritize short-term survival over long-term innovation.

In conclusion, while the proposed tariffs on pharmaceuticals and semiconductor chips from China, Canada, and the EU pose significant challenges to the biotech industry, the impact may not be as dire as some fear. By employing strategies such as diversifying supply chains, investing in domestic manufacturing, engaging with trade and legal professionals, investing in proactive risk management, and collaborating with policymakers, biotech companies can mitigate the impacts of these tariffs and ensure the continued development and delivery of life-saving treatments.