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Global pharmaceutical trade upheavals and disruptions triggered by US-led tariff proposals and negotiations have become the norm across 2025. With the end goal of reshoring US pharmaceutical manufacturing to boost jobs, removing national security risks from over-dependence on global trade partners for drug supply in the event of conflict and improving pricing for US consumers, the US has whipsawed the pharma marketplace as volleys of tariff proposals bounce between the US and trading partners. Right now (and it will likely change again), the US has announced plans to impose 100% tariffs on all imported branded drugs as China removes its 30% import duty on Indian pharmaceutical products. This fluctuating back and forth has become a new reality for the industry as pharmaceuticals are used as bargaining chips in complex trade wars and geopolitics.
The importance of a rapid response
When industrial policy moves this fast, companies that respond most quickly and cohesively achieve resilience in both market share and profit. For example, after the US announced a new Section 2323 investigation into pharmaceutical imports in April 2025, Johnson & Johnson reported its potential exposure to tariffs in just two weeks. Moderna, rapidly responded to the Trump administration’s unfolding 2025 policy on vaccines, chose the UK government as a pro-vaccine partner and location for a new £150 million vaccine site saying: “We’re here on a 10-year strategic partnership, and we will be investing heavily in R&D across that period.”
While this kind of agility is specific to a company’s size, existing footprint, supply chain complexity, and regulatory constraints, as large firms take visible, significant steps in announcing investments, changing supply lines, issuing public statements and strategy changes, mid-sized and smaller pharmaceutical companies may not have the same resources or agile positioning to respond as quickly. This is where Insocius comes in, since we partner with teams, units and companies of all sizes to accelerate performance through complex transitions helping your teams surface what matters most and then build the organisational commitment to act on it.
Supply chains as matters of national security
Now that all major governments classify pharmaceuticals as strategic infrastructure, supply chain decisions have become matters of national security. Since the majority of active pharmaceutical ingredients (APIs) are manufactured in China and India, the permanent implementation of tariffs will make exporting and importing APIs more expensive and drugmakers will be subject to higher costs and likely need to review re-shoring production.
Innovation partnerships
At the same time, innovation partnerships are also facing geopolitical scrutiny. This might look like a re-ordering of manufacturing chains whereby US companies diversify away from Chinese contract manufacturers and instead turn to ‘China Plus One’ strategies that see firms keep select Chinese partners but also build manufacturing ties in Taiwan, Singapore, India, Vietnam and Malaysia. We’ve seen this business model before when expanded Indian API suppliers are contracted as back-ups in case of productivity issues with primary Chinese plants. Tariff proposals are also pushing companies to expand domestic US plants, reduce reliance on China as a single source hub, strengthen manufacturing clusters in North America, Europe, wider Asia and India, and swap concentrated footprints for new flexible multi-node scenarios.
What makes for an effective targeted response?
The question is no longer whether this trend will continue into 2026 and beyond, but instead how effectively your organisation can navigate the constant change. At Insocius we have identified three key themes that need to be understood to most effectively curate a targeted response:
- Supply chain sovereignty is centre stage in the US government’s push to reshore critical pharmaceutical manufacturing to reduce dependency on potentially adversarial nations for life-saving medicines via Section 232 of the Trade Expansion Act. It is expanding in real-time into the healthcare sector where tariffs are being raised on a growing range of imported products such as medical devices and PPE
- Innovation security has emerged as a defined strategic priority and The Committee on Foreign Investment in the United States (CFIUS) now scrutinises biotech deals with the same intensity once reserved for aerospace and telecommunications. EU regulators have now followed suit with their own foreign direct investment screening mechanism (EU FDI Regulation).
- Manufacturing and research footprint decisions now carry geopolitical weight. Where you build facilities, source materials, and locate R&D operations has implications beyond traditional cost-benefit analysis as we’ve seen with Moderna’s new UK vaccine site.
Pricing Implications
In this new landscape, where pharmaceutical products are not only integral to national health security and GDP growth, but also sit as a bargaining chip for leveraging inter-global drug trade treaties, governments can no longer afford to rely on global market mechanisms alone to guarantee a supply of critical medicines. Patient populations, especially those economically disadvantaged, elderly and chronically sick, are exposed to pricing variation scenarios and tariffs could spark drug shortages and pricing surges due to an increase in production costs and supply chain disruption. For example, the US imposing 100% tariffs on imported Indian branded and patented drugs could see the costs of exporting drugs rise significantly for Indian pharmaceutical manufacturers, causing global price elevation (for now, Indian generics are excluded from the tariff).
The organisational challenge
At Insocius we repeatedly observe how strategic implications are clear to leadership, yet organisational response tends to be fragmented. Each function sees valid priorities, but the sum of all the inputs can paralyse decision-making rather than accelerate it. The areas we currently see as hotspots for pharma leaders navigating changes to industrial policy are as follows:
- Global Strategy where industrial policy shifts can unlock competitive advantage through government partnerships, advanced manufacturing initiatives, and reshoring incentives if executed well.
- Regulatory Affairs and Quality, which faces evolving requirements around supply chain transparency, domestic content thresholds, and partnership security.
- Operations, which must navigate manufacturing decisions, dual supply chains, compliance timelines and how to maintain agility and resilience in the overall supply chain.
- Regional teams , where local interpretation of policy guidance can lead to misalignment. When the EU speaks of ‘strategic autonomy’ this can land differently to US concepts of ‘friend-shoring’ and lead to misunderstandings down the chain in how policy ought to be implemented in practice
With so much change in real-time to all of the above, every perspective in a team, unit or company carries merit and the challenge at an organisational level is not that any function is wrong, more so that managing the intersection of all valid concerns while maintaining execution momentum requires a different approach to organisational alignment.
What do ripple effects of a fragmented organisational response look like at this time?
- Delayed decision-making while competitors move decisively on new opportunities. Government approval and reimbursement programs often have limited windows for application and participation.
- Inconsistent stakeholder messaging that undermines credibility with government partners who need confidence in your organisation’s ability to deliver on commitments.
- Missed strategic positioning as the industry reshapes around new geopolitical realities and a re-shaped dominance of the US, China, India, the EU, Switzerland and the UK as pharmaceutical market leaders.
- Inefficient resource allocation across competing internal priorities instead of coordinated investment behind clear strategic choices.
How to avoid a fragmented response
We believe that pharmaceutical organisations who thrive in this new shifting environment share the following common characteristics in how they approach complex, multi-stakeholder strategic decisions:
- Tensions are surfaced early and explicitly. Rather than hoping different functional perspectives will naturally align, they create structured processes to identify where views diverge and why. This isn’t about consensus-building—it’s about ensuring all implications are visible before decisions are made
- What they must react to versus what they can shape is kept in balance. Certain aspects of industrial policy will happen regardless of individual company input. Others represent genuine opportunities for industry leadership to influence policy development. Clear differentiation enables focused effort.
- Scenario-based planning capabilities are built in. Industrial policy implementation rarely follows linear timelines. Organisations that can maintain strategic coherence across different pace and priority scenarios avoid being whipsawed by policy evolution.
- Stakeholder relationship building is invested in before specific outcomes are required. Companies that are already known quantities to key government stakeholders and opinion leaders find doors open more readily when opportunities emerge.
- Internal translation capabilities are created to help different functions understand how policy implications affect their specific areas of responsibility while maintaining connection to broader strategic objectives. They maintain the enterprise view to drive business priorities.
Making it practical
Within all this undeniable complexity, there is also unprecedented opportunity. Government partnerships that were once limited to specific therapeutic areas can now extend across the full pharmaceutical value chain. Manufacturing incentives can fundamentally alter the economics of domestic production. The same is true for the impact of research incentives on development. R&D collaboration with government agencies can accelerate innovation while strengthening strategic positioning. At a practical level we propose the following areas of focus for senior pharmaceutical leaders, each representing important organisational capabilities for execution:
- Cross-functional scenario planning that helps teams understand how different policy implementations would affect their areas while maintaining sight of broader strategic implications.
- Stakeholder mapping and engagement strategies that position your organisation as a constructive partner in policy development rather than a passive respondent to policy implementation.
- Decision-making processes that can balance the legitimate concerns of multiple functions while maintaining execution momentum.
- Communication frameworks that ensure consistent external messaging even when internal perspectives on implementation details may differ.
Ultimately the goal isn’t to eliminate the natural tensions between different functional priorities, it’s to channel those tensions productively toward better strategic outcomes.
The stakes will keep rising
Pharmaceutical companies now stand at the centre of national and global strategy — treated as negotiable strategic infrastructure. Government partners need confidence that their private sector collaborators can deliver on commitments. Investors in the drug markets need assurance that companies can navigate policy complexity without losing competitive focus. This isn’t a temporary challenge that will resolve as policies stabilise. The integration of industrial policy considerations into pharmaceutical strategy is subject to the concealed end goals only known to those pursuing strategic negotiable leverage and therefore only time will reveal a new landscape for global drug markets. Companies that continue working on developing superior organisational capabilities for managing this complexity will achieve the greatest sustainable competitive advantages and if this resonates, Insocius is ready to help you achieve this.
At Insocius, we work with pharmaceutical leaders to accelerate organisational performance through strategic transitions. If your team is navigating industrial policy implications and needs to build stronger alignment around your response strategy, we’d welcome the opportunity to explore how we can help.
#IndustrialPolicy #PharmaStrategy #OrganisationalAlignment #StrategyAcceleration #PharmaceuticalInfrastructure
- The US has threatened to impose 100% tariffs on all imported branded drugs (The Guardian, 26.09.2025 https://www.theguardian.com/us-news/2025/sep/25/trump-tariffs-heavy-trucks-drugs-kitchen-cabinets)
- China removes its 30% import duty on Indian pharmaceutical products (The Pharma Letter, 06.10.25 https://www.thepharmaletter.com/china-unlocks-15-billion-market-for-indian-pharma-with-tariff-cut)
- After the US announced a new Section 2323 investigation into pharmaceutical imports in April 2025, Johnson & Johnson reported its potential exposure to tariffs in just two weeks. Reuters, 15.04.2025 https://www.reuters.com/business/healthcare-pharmaceuticals/jj-beats-wall-street-quarterly-sales-profit-estimates-cancer-drug-sales-2025-04-15/
- Moderna, responding to the Trump administration’s 2025 policy on vaccines, chose the U.K. government as a pro-vaccine partner and location for a new £150 million vaccine site saying: “We’re here on a 10-year strategic partnership, and we will be investing heavily in R&D across that period.” The Guardian, 25.09.2025 https://www.theguardian.com/business/2025/sep/25/moderna-boss-defends-uk-in-drug-pricing-row-as-he-opens-150m-oxfordshire-facility
- Since the majority of active pharmaceutical ingredients (APIs) are manufactured in China and India. Statistica. https://www.statista.com/statistics/1498065/api-production-volume-by-region/?srsltid=AfmBOorD-AWef7pdwDJ24YbyXS6t-d40V0T2NLrO52WTpqqY5cGVW3uA
- US 100% tariffs on imported Indian branded and patented drugs to the US could see the costs of exporting drugs rise significantly for Indian pharmaceutical manufacturers, causing global price elevation (for now, Indian generics are excluded from the tariff) Times of India 27.09.2025 https://timesofindia.indiatimes.com/business/india-business/trumps-100-tariffs-on-branded-drugs-indian-generics-spared-but-poses-risks-for-pharma-sector-explained/articleshow/124176474.cms