Trump's Tariffs Set to Reshape US Clinical Trial Landscape and Drug Manufacturing
Key Insights
President Trump's tariff policies targeting China, with potential expansion to Canada, Mexico, UK, and EU, are poised to significantly impact pharmaceutical manufacturing and clinical trial costs in the US.
With China currently producing 80% of US pharmaceutical APIs and half of generic drugs (search), the tariffs could force a major restructuring of drug manufacturing supply chains and increase clinical trial expenses.
The BIOSECURE Act, combined with new tariffs, may accelerate the shift of manufacturing away from China, potentially towards India or domestic US facilities, though capacity and cost challenges remain significant.
The pharmaceutical industry is bracing for significant disruption as President Trump's tariff restrictions on China take effect, with potential expansion to other key markets including Canada, Mexico, the UK, and European Union. The impact is expected to ripple through the entire clinical trial ecosystem, affecting everything from drug manufacturing to research site operations.
Impact on Pharmaceutical Manufacturing
The US pharmaceutical sector currently relies heavily on foreign manufacturing, with approximately 80% of active pharmaceutical ingredients (APIs) and 50% of generic drugs (search) sourced from overseas manufacturers, predominantly from China. During a recent Senate HELP Committee hearing, HHS nominee Robert F. Kennedy Jr. emphasized the critical need for the US to regain control of drug manufacturing capabilities.
"There is heavy reliance on Chinese imports for APIs and generics," notes Cyrus Fan, a GlobalData Life Sciences research analyst specializing in US and Canadian markets. This dependence has become a central concern as new tariffs threaten to increase manufacturing costs significantly.
Generic Drugs and Clinical Trial Costs
The impact on generic drugs (search), which often serve as active controls in clinical trials, could be particularly severe. Doug Drysdale, CEO of Cybin (search), explains: "Generic drugs are subject to intense price competition so manufacturers must find locations where they can make these compounds on a competitive cost basis and tariffs will not help. As a result, these treatments are going to become more expensive and, in some cases, it might stop those treatments from being available at all."
BIOSECURE Act Complications
The situation is further complicated by the pending BIOSECURE Act, which passed the House in September 2024. The legislation would prohibit federal funding for companies collaborating with certain manufacturers of concern, including major Chinese CDMOs like WuXi Biologics and WuXi AppTec.
"WuXi is one of the biggest CDMOs on the planet, even if they bypass the BIOSECURE Act coming into force, the additional costs of importing API from tariffs will have a significant impact," says Anshul Mangal, president of Project Farma (search).
Research Site Operations
Clinical trial sites face their own set of challenges under the new tariff regime. Essential supplies and equipment, including gowns, gloves, syringes, and advanced medical devices, may become more expensive. According to industry experts, supply expenses currently account for approximately 13% of hospital costs, and increased tariffs would further elevate these expenditures.
The potential tariffs on Mexican imports are particularly concerning, as Mexico is currently the leading exporter of medical equipment and devices to the US. "Tariffs on Mexican medical device imports would increase costs for clinical trial infrastructure, affecting trial site setup and operations," Mangal explains.
Future of US Clinical Trials
While some industry experts worry that increased costs could make the US less attractive for clinical trials, particularly for small and medium-sized biotechs, others remain confident in the market's resilience. Drysdale maintains that the US market's significance, representing approximately half of the global pharmaceutical market value, will continue to make it an essential location for clinical research despite higher costs.
The industry appears to be at a crossroads, with companies actively exploring alternative manufacturing locations and supply chain restructuring. India has emerged as a potential alternative to China, while some companies are considering domestic manufacturing options despite higher operational costs. However, questions remain about whether US manufacturing capacity can meet the increased demand, particularly given existing drug shortages and historical lack of onshore manufacturing incentives.