In the face of tariffs, FDA-approved drug manufacturing deals are shifting to Europe

Last twelvemonth saw the largest autumn successful US declaration manufacturing (CM) deals for FDA-approved drugs successful 5 years. Despite the highest import tariffs successful modern past connected EU pharmaceuticals, GlobalData’s Deals database revealed that biopharma companies, including US-based firms, are progressively outsourcing cause manufacturing for the US marketplace to European-based facilities alternatively than turning to home suppliers.

The graph beneath shows a gradual diminution successful US-based and Europe-based CM deals for FDA-approved drugs betwixt 2020 and 2023, which was mostly attributed to the emergence and consequent autumn of the Covid-19 vaccine exigency request implicit that period. Between 2023 and 2024, woody measurement increases successful some the US and Europe arsenic the manufacture recovers post-pandemic. In 2025, however, the spread betwixt US- and Europe-based CM deals was the widest yet, with Europe signaling much than triple the US woody volume. Germany, which is presently Europe’s starring cause manufacturer, according to GlobalData’s Drugs by Manufacturer database, accounted for 12 of those deals, averaging astatine 9 CM deals per twelvemonth for US cause manufacturing implicit the six-year period.

Undeterred by the 15% import tariffs connected EU pharmaceuticals, implemented past twelvemonth to incentivise home manufacturing, biopharma companies look to beryllium progressively turning to CM successful Europe. In 2025, 9 retired of the 14 US-based pharma companies that outsourced manufacturing (including Johnson & Johnson and Vertex Pharmaceuticals) invested successful a full of 13 Europe-based manufacturing deals. By comparison, little than fractional of these companies invested successful US-based facilities, signing a full of 8 CM deals.

Companies are besides pursuing this inclination with their in-house manufacturing facilities. Earlier this year, Novo Nordisk and Eli Lilly announced investments of $501m and $3bn, respectively, to grow their in-house European manufacturing sites. With the caller FDA support and occurrence of Novo’s Wegovy pill, which is presently the archetypal and lone oral glucagon-like peptide-1 (GLP1) receptor agonist disposable successful the Western market, Novo is readying to grow its tabletting installation successful Ireland to conscionable the existent and aboriginal US marketplace demand. A diversified planetary proviso chain, peculiarly amid the existent unpredictability of the US governmental climate, volition let biopharma companies to minimise the associated risks of sudden, catastrophic disruptions to production.

The displacement of CM deals for FDA-approved drugs toward Europe highlights the constricted interaction that European import tariffs person had to sway biopharma companies distant from European-based CM and towards the US. The region, with Germany successful particular, is increasing to beryllium an charismatic and well-established hub for pharmaceutical manufacturing for the US market. Such a displacement whitethorn hinder the existent US administration’s plans to reshore home CM.