By Sougato Das, President and COO, LSN
The newly proposed 200% pharma tariff threat (not a reality yet, but Trump has indicated they will go into effect on August 1) hasn’t delivered an immediate market shock; biopharma stocks have remained steady, albeit flat. The 12-18 month grace period included in the tariff proposal gives large pharma wiggle room to pivot to US manufacturing while stockpiling to ride out the remaining 2 – 3 years required to make the transition. Predictably, there are concerns that such tariffs could increase drug costs, lead to shortages, impact profit margins (dampening appetite for investment/BD) and disrupt the supply chain.
The tariff threat has, however, catalyzed a strategic pivot toward U.S. manufacturing, with major firms like Biogen, J&J, Eli Lilly, Roche, Sanofi, and Merck spending billions in U.S. facilities.
In the biotech investment and BD community, the question is: how will/has this affect/ed investment and BD activity?
- Overall biotech investment may slow as cost inflation pressures biotech valuations and investment capital.
- It has been theorized that the pharma tariff threat has contributed to the IPO dry-up in life sciences (nearly all biotech IPOs since 2023 are trading below their IPO price). A continued drought would obviously have a negative impact on biotech venture investment.
- If large pharma funnels billions into new manufacturing plants, that money must come from somewhere (usually R&D), and may signal a further slowdown in pharma partnering and investment.
- An unpredictable economic environment could deter biotech investment. Such investor caution could lead to more selective funding rounds and a decrease in overall venture capital flowing into the sector.
- Finally, it’s well-understood that investors are becoming more selective, focusing on companies with de-risked assets, strong scientific data, and clear commercialization potential.
On the positive side, we see pharma biotech acquisitions up, simply due to how inexpensive small biotechs are to buy right now.
These factors make it far more critical this year than in 2024 or 2023, that you meet with elevated numbers of investment or strategic partners to overcome the above hurdles. Partnering events like RESI are the best way to have 10-20 investor meetings in a day. Using Life Science Nation’s BD Assist, where we set up investor meetings for you, is another option to supercharge your fundraise.
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