Reshoring Pharma and Biotech Manufacturing Ahead of This Summer’s Tariff Deadlines: Q&A with Ryan Last

In April of this year, President Trump announced plans to impose 100% tariffs on branded pharmaceutical imports. At the time, he set a deadline of July 31, 2026, for major pharmaceutical companies to negotiate onshoring agreements (which would reduce the tariffs to 20%).

Also, companies that negotiated deals with the administration as part of the President’s MFN initiative would be exempt from these tariffs. Further complicating the issue, regions with previously negotiated tariff deals would also be exempt from 100% tariffs on pharma imports.

This move is part of the President’s plans to strengthen domestic manufacturing and reduce the United States’ reliance on imports.

Pharmaceutical Executive spoke with Ryan Last, a senior associate at Troutman Pepper Locke, about the situation pharmaceutical and biotech companies face with just one month remaining before the initial deadline hits. While previous deadlines have passed by, pharma companies still have time to prepare and make plans, while also bracing for the larger impact that these tariffs may have.

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Pharmaceutical Executive: What should pharma and biotech companies be doing to prepare for the July 31^st deadline?
Ryan Last: If you're even considering an onshoring agreement, the time for conceptual discussions has passed. Obviously, the June deadline is now gone, but you need a concrete, data-backed proposal.

If you had done that, there are four steps these companies should have gone through; focusing on products that are clinically critical and heavily dependent on foreign resources and realistically assessing what's able to be onshored.

There is also getting regulatory, manufacturing, supply chain, financing, quality, and research groups and departments within your company to the table. Legal and compliance can't do this alone, it needs to be done from the top down; and explaining the current vulnerabilities and presenting concrete onshoring plans, potentially with partners.

So maybe the company itself isn't going to submit an onshoring proposal, but it's going to partner with a company in the US that is.

I think we can't tell what's going to happen because the tariffs haven't fully taken effect. So far, what we're seeing, based on calls I've had with multiple large organizations and clients, is that the industry is committing over $500 billion in US investment, which is more than what we expected when the Section 232 tariffs were announced.

We're seeing facilities starting construction, but in the end, shifting supply chains and building these facilities is not something that happens overnight.

Pharmaceutical Executive: How will targeted onshoring impact pharma’s domestic manufacturing?
Ryan Last: Targeted reshoring is very hard to do, because pharmaceutical products themselves operate on razor-thin margins. So, tariffs alone are not going to make US manufacturing very economically attractive from the start.

These new facilities that are supposedly being built require a lot of capital, skilled labor, and approvals, and that takes years. That's not something that happens overnight.

I'm not sure this onshoring reduction plan will impact as many people as quickly as expected, because companies may not be able to get their onshoring plans in place in time to qualify for the lower tariff amount the administration wants.

Pharmaceutical Executive: What are realistic timelines for reshoring pharma and biotech manufacturing?
Ryan Last: Companies should watch not just the tariffs themselves, but the entire ecosystem of trade, regulatory, and industrial policy from the US and overseas. Right now, there are negotiations going on around USMCA, and pharmaceuticals could be a big part of that.

I think refinements to Section 232 (its scope and exclusions) could happen. We're going to see how Commerce handles the first wave of onshoring applications, which will set the precedent moving forward, and whether additional measures hit related inputs like packaging or device components, that's yet to be seen.

On the international side, we're going to look to see what countermeasures China and India implement on raw materials and APIs, and whether US allies coordinate to build non-Chinese manufacturing or shift production onshore into Europe to get better deals within the European Union, similar to what other countries have gotten.

We're going to see shifts in pricing and availability for critical APIs, as well as customs enforcement trends, I expect CBP will increase scrutiny of HTS classification, country-of-origin classification, and valuation.

Pharmaceutical Executive: How are pharma and biotech companies handling uncertainty surrounding tariffs?
Ryan Last: The larger companies are definitely going to have more to say. This isn't the last word on it. I don't think this is where it ends. We're going to see the market react to this as we get closer to the launch date.

And as we've seen in the automobile industry under Section 232, where changes resulted in how automobile and steel tariffs were imposed, we'll likely see a similar shift in how this is implemented after the first few months. I don't know if the impact has fully set in yet.