EU Pharmaceutical Industry Warning: U.S. Tariffs Could Accelerate Industry Relocation

At a meeting held this Tuesday, European pharmaceutical companies issued a warning to the President of the European Commission, Ursula von der Leyen, that the policies proposed by the United States to impose tariffs may accelerate the trend of European pharmaceutical industry moving towards the United States. The European Federation of Pharmaceutical Industries and Associations (EFPIA) issued a statement after the meeting, stating that while pharmaceutical products were not included in the series of import tariffs announced by US President Trump last week, he has indicated that drugs will be taxed separately in the future. Members of EFPIA include European pharmaceutical giants such as Bayer from Germany, Novartis AG Sponsored ADR from Switzerland, and Novo Nordisk A/S Sponsored ADR Class B from Denmark. The association called on the EU to take "swift and aggressive action" to reduce the risk of the pharmaceutical industry moving out of Europe to the US. EFPIA emphasized that the EU should reform the regulatory framework of the pharmaceutical industry to be more favorable for innovation and strengthen the protection of intellectual property rights in Europe. Despite these demands not being made for the first time, EFPIA has repeatedly warned that if the EU does not adjust the pharmaceutical regulations that are about to be reformed, the European pharmaceutical industry will lose its advantage in the increasingly fierce competition in the US, China, and other emerging markets. "Now that the threat of tariffs is imminent, Europe has almost no advantage in attracting investments, while the motivation for companies to move to the US is increasing," EFPIA wrote in the statement. According to reports, the meeting invited CEOs of several EU-based pharmaceutical companies, the European Biotech Association, and representatives from the generic drug industry organization "European Generics" to attend. However, Europe's largest generic drug manufacturer, Sandoz, stated to the media that they were not invited to the meeting. Although the EU and the US are highly interconnected in the pharmaceutical supply chain, the drugs annually imported from Europe to the United States generate billions of dollars in revenue. According to the latest data from the EU statistics office, the total export value of pharmaceutical products from the EU to the US in 2023 is approximately 90 billion euros (about 97 billion US dollars). It is noteworthy that in recent years, many European pharmaceutical companies, including Novartis AG Sponsored ADR (NVS.US), have been heavily expanding their production facilities in the US. According to EFPIA's data, in 2021, the North American market accounted for close to 50% of the global drug sales, while Europe only accounted for about 25%. Whether headquartered in the US or Europe, the US market is the main source of revenue for these large pharmaceutical companies. After the US imposed tariffs, the EU has also initiated retaliatory measures. The European Commission proposed on Monday to impose 25% retaliatory tariffs on a series of US products, including soybeans, nuts, and motorcycles. However, the EU has not yet made a public response to the content of the EFPIA meeting.