Roche CEO Warns of Tariff Impact on Pharma M&A as Industry Faces Regulatory Challenges

Pharmaceutical industry leaders are grappling with potential tariffs and regulatory changes that could reshape the landscape of mergers and acquisitions (M&A) and drug development. Roche, a major player in the sector, has signaled both caution and commitment in response to these emerging challenges.

Tariffs Could Dampen M&A Activity

Thomas Schinecker, CEO of Roche, has warned that the pharmaceutical industry may face hurdles in pursuing M&A deals if the U.S. government implements threatened tariffs on the sector. During a first-quarter earnings call, Schinecker emphasized that while Roche's current approach to acquisitions remains focused on financial viability, the introduction of pharmaceutical tariffs could make it "more difficult to make financial sense of any M&A deals."

The CEO's comments suggest a potential industry-wide slowdown in M&A efforts as companies await clarity on the tariff situation. "My assumption would be that you will see an industry worldwide situation where people probably reduce the effort at this stage, and we'll see how things develop," Schinecker stated, acknowledging the rapidly changing nature of the current environment.

Roche's U.S. Investment Plans Amid Regulatory Uncertainty

Despite the looming threat of tariffs, Roche has announced plans to invest $50 billion in the United States over the next five years. This substantial commitment includes the expansion and upgrading of three existing pharmaceuticals and diagnostics R&D centers, as well as the consolidation of the company's cardiovascular, renal, and metabolism R&D work at a new center in Harvard's Enterprise Research Campus.

The investment comes at a time when the pharmaceutical industry is facing challenges from the Trump administration's policies. However, Teresa Graham, CEO of Roche Pharma, reported that despite widespread cuts to the FDA's workforce, the company has not yet experienced any slowdown in development or approval processes. "At this time, we are not seeing any slowdown, either in development or approval processes, and things seem to be fairly business as usual for the pharma side," Graham stated during the earnings call.

Pipeline Updates and Strategic Decisions

Roche's first-quarter earnings report also revealed changes to its drug development pipeline. The company disclosed the termination of two phase 1 candidates: RG6315, which was being developed for systemic sclerosis, and P-MUC1C-ALLO1, an allogeneic CAR-T therapy acquired through Roche's $1.5 billion acquisition of Poseida Therapeutics in November 2024.

A Roche spokesperson clarified that the decision to halt work on RG6315 was made for "strategic reasons" rather than due to safety concerns. The termination of P-MUC1C-ALLO1 was notable as it had not been part of Roche's previous partnership with Poseida, highlighting the complexities involved in integrating acquired assets into existing pipelines.

These pipeline adjustments underscore the ongoing need for pharmaceutical companies to continuously evaluate and refine their development strategies in response to both internal priorities and external market conditions.