How the Tariffs Expose Vulnerabilities in the Pharma Pipeline

Pharmaceutical Executive: What vulnerabilities do the current economic situation and tariffs expose for pharmaceuticals?
Arda Ural: If you look back over the past 30 years, through four recessions, we have not seen any economic impact on the pharmaceutical industry during those periods. The total number of prescriptions continued to increase during those years because people continued to get sick. This is not like retail or entertainment that feels an immediate toll.

CFOs have capital to allocate with a goal of maximizing shareholder return by virtue of return on invested capital. There’s competition for the source of capital that can be deployed. Companies can pay down their debts, increase their dividends, buy back shares, continue to invest in R&D, or they can put it into supply chain, ERP, and things like AI.

For that reason, that restriction may put pressure on the capital allocation practices of these companies. We advise our clients to make sure their return on invested capital still makes sense for shareholders and stake holders.