Tariff threats prompted pharma production boom last year: report
While the threat of U.S. import tariffs prompted a surge in drug production last year, that output is slated to slow across multiple geographies in 2026. And, even as the biopharma industry enters the new year with greater certainty around the U.S.’ trade policy, the risk of another “tariff flare-up” looms large.
That’s the macro situation according to financial services firm Atradius, which noted in a new industry trend report (PDF) that global pharmaceutical production leapt 9.1% in 2025, mainly on the back of “front-loading activity in anticipation of US tariffs.”
In 2026, however, output growth is expected to slow to 1.6% as a move toward “retrenchment” results in a slowdown of production growth in the first half of the year, the report predicts.
Nevertheless, a rebound could be not too far behind, with Atradius reckoning that global drug production will eke out 3.7% growth in 2027. That general trend holds true when looking at Atradius’ predictions for the growth of pharmaceutical sales and investments around the world in 2027, too.
As for 2025, the financial services company logged 9.7% growth in global pharmaceutical sales and 5.2% growth in overall industry investment. Atradius expects momentum in those areas will slow to 1.6% and 2.7% in 2026, respectively.
The Trump administration’s persistent threat of pharmaceutical import tariffs was the driving force behind last year’s manufacturing surge, the experts say.
Still, the overall impact of U.S. trade duties has been “limited,” according to Atradius, which pointed to the exemptions Big Pharma companies have won through White House drug pricing deals as well as country- and region-specific agreements capping U.S. import tariff rates. Furthermore, generic drugs have largely been excluded from President Donald Trump’s trade negotiations, sparing the medicines that make up the bulk of the American public’s prescriptions from supply and price disruptions.
The industry isn’t out of the woods yet, with the report cautioning that “the downside risk of another tariff flare-up remains.”
Earlier this week, following an intensification of Trump’s rhetoric around a potential U.S. acquisition of Greenland, concerns were raised that the threat of new 10% taxes on select European countries that showed military support for the autonomous Danish territory might scupper the U.S.-EU trade deal reached last summer. Under that accord, which still needs to be ratified by European lawmakers, most European exports, including pharmaceuticals, will have tariffs capped at 15%.
Trump ultimately backed down on the threat after reaching the “framework of a future deal” on his Greenland ambitions during the World Economic Forum in Davos, Switzerland, this week. Still, the uncertainty his comments cast on previously secured agreements lends credence to Atradius’ “tariff flare-up” warning.
Overall, Atradius suggested industrial policy will play an increasingly large role across the pharmaceutical industry in the coming years, buoyed by government efforts around the globe to reduce reliance on imports and incentivize strategic stockpiling and domestic manufacturing.
“Supply networks of pharmaceuticals and medical devices will become more fragmented due to geopolitical tensions,” the firm predicted.
Mapping 2025’s production output
In the U.S., pharmaceutical manufacturing output is expected to “decelerate” to 0.9% this year—a marked departure from the 5.2% increase charted in 2025, according to Atradius’ report. The outlook forecasts a 2.5% rebound in U.S. pharmaceutical output growth in 2027.
The report again pointed to industry-won tariff exemptions as a relief for drugmakers in the near term, while caveating that “uncertainty remains, as Washington has repeatedly announced its intention to target medicine imports.”
Aside from the most-favored-nation drug pricing deals that have won many large pharma companies exemptions from tariffs, efforts by the FDA to ease the build-out of new production facilities in the U.S. could also bolster the country’s pharmaceutical output, Atradius said.
At the same time, “high production costs could still make it more cost-effective for pharmaceuticals to be manufactured elsewhere,” the report reads.
Perhaps most striking in Atradius’ report was the 21.6% growth in pharmaceutical output that the U.K. and the EU charted in 2025, again attributed to “front-loading triggered by massive U.S. tariff threats.” In Ireland—a country with a wealth of large pharma manufacturing outposts—production output surged a whopping 41.3% in 2025, according to Atradius. The country is predicted to experience a sharp turn in the other direction this year, with Atradius forecasting a 6.4% output decline.
This year, the U.K. and the EU’s combined output is tipped to “contract temporarily” by 3.7%, by Atradius’ reckoning.
While the EU has presently secured a 15% tariff rate cap, the U.K. has dodged U.S. import duties altogether in part by agreeing to raise the net prices its National Health Service pays for innovative medicines by 25%.
While those agreements blunt the impact of tariffs in Europe, Atradius acknowledged that shifting manufacturing to the U.S.—a key part of Trump’s trade agenda—is both expensive and complex, posing challenges for smaller companies with fewer resources.
Unlike Europe and the U.S., China’s pharmaceutical output is expected to continue growing in 2026. Atradius estimates that the country’s drug production will increase 6.6% this year versus 3.6% growth in 2025.
China’s exposure to U.S. tariffs is “limited,” and, while the country accounts for some 40% of the world’s active pharmaceutical ingredient output, those drug building blocks aren’t targeted by U.S. tariffs, Atradius noted.
