Pharmaceutical Industry Braces for Potential Tariffs as AbbVie and Eli Lilly Make Strategic Moves

In a week marked by political uncertainty and strategic acquisitions, the pharmaceutical industry faces potential reshoring pressures while key players make calculated bets in emerging therapeutic areas.

Trump's Tariff Threats Prompt Industry Response

Former President Donald Trump's recent threats to impose tariffs on pharmaceutical imports have sent ripples through the industry. Pfizer CEO Albert Bourla has stated that the company is prepared to reshore manufacturing operations if these tariffs materialize. This sentiment is echoed by Eli Lilly's actions, with the company committing $27 billion to boost its U.S. manufacturing capacity.

The potential for increased tariffs underscores a growing trend of pharmaceutical companies reevaluating their global supply chains and considering domestic production alternatives to mitigate future risks.

Strategic Acquisitions in Obesity and Molecular Glues

As the industry grapples with potential policy shifts, major players are making significant moves in high-potential therapeutic areas. AbbVie has entered the competitive obesity market through a licensing deal worth up to $2.2 billion with Gubra. This agreement focuses on bringing a long-acting amylin drug to market, signaling AbbVie's late but substantial entry into the rapidly growing obesity treatment sector.

Simultaneously, Eli Lilly has invested over $1.2 billion in a licensing deal with Magnet Biomedicine, focusing on molecular glues. This emerging field of drug discovery has garnered significant attention for its potential to target previously "undruggable" proteins, opening new avenues for therapeutic interventions.

Regulatory Uncertainty and Industry Challenges

The pharmaceutical landscape is further complicated by regulatory uncertainties under the new administration. An FDA external advisers meeting on vaccine policy, scheduled for March 13, has been canceled. This follows the postponement of the CDC Vaccine Advisory Board's first meeting of 2025, raising concerns about potential delays in vaccine-related policy decisions.

Additionally, the industry faces a setback with Congress's failure to reauthorize the rare pediatric disease Priority Review Voucher (PRV) program at the end of 2024. This development is expected to impact many biopharmaceutical companies that have relied on the sale of PRVs for additional funding.

As the sector navigates these challenges, companies continue to pursue advancements in immuno-oncology, with firms like Bristol Myers Squibb, Roche, Summit Therapeutics, and BeiGene targeting novel pathways such as TIGIT, VEGF, and RAS. These efforts aim to replicate the success of blockbuster drugs like Keytruda, which led global pharmaceutical sales in 2024.