EU's pharma giants urge action to keep innovation amid US trade tensions

European pharmaceutical companies have issued a stark warning to European Commission President Ursula von der Leyen regarding the potential impact of US President Donald Trump's proposed tariffs, which could hasten the industry's shift away from Europe to the United States.

The warning came during a meeting on April 8, where senior executives from EU-based pharmaceutical companies, along with representatives from industry trade lobbies EFPIA and Europabio, expressed concern over the looming threat to investment and innovation in Europe, Caliber.Az reports citing foreign media.

According to two anonymous sources familiar with the meeting, the European Federation of Pharmaceutical Industries and Associations (EFPIA) urged von der Leyen to take "rapid and radical action" to mitigate what they called the "risk of exodus" to the US. The industry's representatives warned that without significant regulatory reforms, Europe could lose its competitive edge in the global pharmaceutical market.

The executives emphasized the need for changes to Europe's regulatory framework to foster innovation, including stronger intellectual property protections. They argued that the European Union must act swiftly to prevent a shift of research and development activities from Europe to the US, where tax incentives and other measures have already made the country an increasingly attractive destination for pharmaceutical investment.

EFPIA declined to comment on the specifics of the meeting.

The concerns raised by the pharmaceutical sector are not new. EFPIA has long warned that if Europe fails to modernize its pharmaceutical laws, the continent could fall behind in the global race for pharmaceutical development and innovation. The US is currently the largest pharmaceutical market by sales, attracting both American and European companies. In 2021, North America accounted for nearly half of global pharmaceutical sales, with Europe capturing just 23.4 per cent.

Although pharmaceuticals were excluded from the tariffs President Trump announced last week, he signaled that the sector would soon face separate tariffs. Trump's recent comments on the tariffs underscored his belief that the US would benefit from pharmaceutical companies "roaring back" to the US, with the threat of a "big tax to pay" for those who choose to remain outside the country.

The stakes are high for both regions. In 2023, EU exports of medicines and pharmaceutical products to the US reached approximately 90 billion euros ($97.05 billion), according to the latest Eurostat data. As global competition for pharmaceutical dominance intensifies, both the US and Europe are engaged in a high-stakes battle to secure their place as the leading hub for pharmaceutical innovation.

In response to the US tariffs, the European Commission proposed counter-tariffs of 25 per cent on a variety of US goods, including soybeans, nuts, and motorcycles, in an attempt to shield European industries from the potential fallout. However, pharmaceutical leaders remain concerned that the trade tensions could exacerbate existing challenges facing the European pharmaceutical industry, prompting further investment and talent migration to the US.

As the global pharmaceutical industry navigates these economic and regulatory challenges, both the US and Europe will need to balance their strategies to ensure that innovation, investment, and competitiveness remain at the forefront of their agendas.

By Vafa Guliyeva