A recent survey conducted by CRB revealed that the life sciences industry in the U.S. has shown contrasting responses to tariffs imposed by the Trump administration. While larger pharmaceutical companies, referred to as Big Pharma, are ramping up manufacturing investments to combat the impact of tariffs, smaller biotech firms are facing challenges and uncertainties in their investment strategies.
The CRB’s 2025 Horizons Life Sciences Report highlighted that 58% of life sciences companies surveyed have not altered their investment strategies in response to tariffs. However, this percentage significantly rises to 73% when focusing on start-ups, indicating the constraints faced by smaller players in the industry.
One of the most concerning findings of the survey was the anticipated 370% increase in negative effects on new drug and biologic license applications due to U.S. federal policy changes and potential layoffs at the FDA. This indicates a growing sense of instability and disruption within the industry caused by policy uncertainties.
While larger corporations in the life sciences sector are accelerating investments, especially in the U.S., smaller biotech companies are grappling with limited resources and flexibility to navigate the challenges posed by tariffs. Big Pharma entities like Pfizer, Johnson & Johnson, and Eli Lilly have pledged substantial investments in response to tariff threats, showcasing their ability to leverage financial tools and resources unavailable to smaller players.
The disparity in responses between large corporations and small biotechs is further highlighted by the limited options smaller companies have in mitigating the impact of rising costs due to tariffs. With smaller cash reserves and less sophisticated logistics networks, these companies are left with the arduous task of fundraising to sustain operations amidst escalating expenses.
Despite the challenges faced by smaller biotechs, industry executives remain optimistic about North American manufacturing growth, ranking it as the third-highest region for expected growth over the next five years. However, there are indications of a pullback in investment plans, with 29% of North American companies slowing down investments and decision-making processes, and 27% putting business plans on hold due to market uncertainties stemming from tariffs and inflation.
The Trump administration’s proposed cuts to NIH funding have also raised concerns among industry executives, with 22% already experiencing significant negative impacts and 41% anticipating adverse effects in the future. These funding cuts could potentially hinder innovation and research within the life sciences sector, further complicating the landscape for companies across the industry.
In conclusion, the divergent responses of Big Pharma and small biotech companies to tariffs underscore the challenges and opportunities within the life sciences industry. While larger corporations can leverage their resources to accelerate investments and navigate policy uncertainties, smaller players face a more precarious situation with limited options to combat rising costs. As the industry grapples with evolving regulatory landscapes and funding constraints, strategic decision-making and adaptability will be crucial for companies to thrive amidst uncertainty.
- Larger pharmaceutical companies are accelerating investments in response to tariffs, while smaller biotech firms face challenges in adjusting their strategies.
- Industry executives anticipate North American manufacturing growth to be the third largest globally over the next five years, despite concerns over policy changes and funding cuts.
- The disparity in financial resources and capabilities between Big Pharma and small biotechs highlights the need for strategic planning and adaptability in navigating market uncertainties.
- Tariffs and regulatory uncertainties are impacting investment decisions, with a significant percentage of companies either slowing down investments or putting business plans on hold.
- The potential effects of NIH funding cuts on innovation and research within the life sciences sector are raising concerns among industry executives.