Name: How Global Tariffs Are Impacting the Life Sciences Industry
Uploaded: 2025-05-06T14:46:10.606Z
Duration: 29 min 31 s
Description: How Global Tariffs Are Impacting the Life Sciences Industry

Transcript for "How Global Tariffs Are Impacting the Life Sciences Industry": It's May 6, and you're very welcome to our live roundtable on tariffs and their implications for the life sciences industry. I'm Brian Cleary. I'm the marketing director for NSF Life Sciences, and thank you very much for joining us today. Before we get started, just some resources to help you throughout the roundtable and also after the event. If you look on your screen, you will see a box to your right that says chat, docs, and q and a. Chat is as the name suggests. You can chat with us throughout the thirty minutes or so that we're going to be here discussing tariffs. In the documents tab, that's quite interesting. You can connect with all of the speakers. So you'll see the speakers' names, and you can connect with them via LinkedIn. And I would encourage you to do so because we've got some fantastic experts here today. And also, you will find a link to the NSF tariffs and life sciences supply chain page on nsf.org. And then in the q and a page, you or the q and a tab, I should say, You will have the opportunity to ask questions for the speakers. And towards the end of our thirty minutes together today, we'll try and get through as many of those as possible. And also, thanks very much to people who have submitted questions already, with regards to today's topic. And as I said, we'll probably get through those as quick as we can. Just before we get started, just to note that NSF is an independent nonpolitical organization. And throughout today's conversation, we'll be looking at this and we won't be looking at the political ramifications of of tariffs. More so, we look at their impact from equality, supply chain, regulatory, and other aspects within the life sciences industry. So let's get started. And let me introduce you to our speakers today. Harold Chase is NSF's global director of government affairs, and Harold joins us today from the Washington DC area. Hello, Harold. Morning, Brian, or afternoon, depending on where you're at. Depends where we are in the world. Thanks very much, Harold, and thanks very much for joining us. And not too far from you in Germantown in Maryland, I'm also joined by doctor Kush Dhody. Kush is the president of Amarex, which is an NSF company, and it is our clinical research organization. Kush, you're very welcome to the call today. Thank you for having me, Brian. Delighted to have you here, Kush. Also, we're joined by doctor Julia Marré. Doctor Julia Marré is in our pharma biotech division and is a principal consultant there. Julia, you're very welcome to today's call. I think you might be on mute there, Julia. But you're very, very you're very welcome all the same. And finally, let me introduce Sarah Moore. Sarah is a principal program lead in NSF's medical devices business unit. Good afternoon, Sarah. Hi, Brian. Nice to be here. Thank you. Thanks for and thanks all for joining us. So what I want to talk about today is the impact of tariffs on the life science sector, pharma, clinical, and medical devices. But to give us a framing for this today, Harold, I'm gonna start with you. Can you set the scene for us where we are today on May 6 with regards to TAFS? Yeah. Well, let's go back to, day one of the of president Trump's second term, 01/20/2025. He issues a presidential memorandum called the America First Trade Policy. And in that memorandum, he directs his secretary of commerce to consult with the, secretary of treasury and The US Trade Rep to investigate trade deficits and recommend remedies including tariffs. So that that just sort of sets where where we're gonna go from there. Then on February 13, he issues another presidential memorandum called the fair and reciprocal plan. And that is these reciprocal tariffs that I think, you know, all of us have heard a lot about at this point. So that that was February 13. On April 5, they actually implement the reciprocal tariff plan, which includes a year universal 10% tariff and then additional tariffs on countries, depending on a formula they came up with. The most of these tariffs, with the exception of China, have been delayed except for the universal 10% tariff is still in place. We'll say right now, pharmaceuticals are excluded and active pharmaceutical ingredients from the 10% base tariff. However, medical devices are not. On April 14, there's actually a very important announcement came out where was announced there was what's called the section two thirty two probe of pharmaceuticals, and semiconductors. But for for this, discussion, you know, they're kind of focused on pharmaceuticals. And this is where they're they're taking a look at what the impact is, of, trade on pharmaceuticals to national security. So it's a it's a national security investigation. Same about two hundred and seventy days under law to to complete that investigation. And it doesn't mean that they have to wait that long to to do, things that may impact pharmaceuticals, but that that sort of gives that timeline. On April 15, there was a an EO, executive order, as it's called, on lowering prescription drug prices. A lot of that comes from, Medicaid, negotiation for for prices, but, you know, that's that's another factor in here. We do know that, president Trump, is looking at tariffs, on pharmaceuticals in particular because he has said so? I know January 27, he had said that, he he announced that new tariffs would be coming on pharmaceuticals. February 18, he indicated that these tariffs would be about 25% or higher. And then on April 8, he again said that we would have, forthcoming tariffs. He did that at at a political dinner here in DC. I I believe our perhaps was down in Florida. I'm not sure. I think it was here in DC. Anyways, this is sort of where we're at. The other thing to think about as we're doing this, is that The US based, medical devices and pharma manufacturers are subject to tariffs and retaliatory tariffs that are imposed by China. So that is something to think about. And then as well as, the medical devices, in addition to the baseline tariff, they're also subject to, the tariffs that are on China, Mexico, and Canada. So that's an additional because those are non, USMCA goods, and so they are subject to that tariff. So that that can impact the cost. Okay. Thanks very much for that, Harold. It's it's quite interesting in the sense that when we're hearing a lot about this, people talk about it from a US perspective. But the retaliatory tariffs have, you know, there's essentially a a second string to that there. Just going to go to you, Dr. Kush Dhody, on this. In terms of the situation right now, what are you hearing from customers or or companies that you're dealing with with regards to the tax issue? So we are hearing growing concerns from our client about rising clinical trial cost. And some of that is due to short term changes like upcoming ICH e six r three guidelines, which require further updates to risk based quality management system, and these are set to take effect in July 2025. There is also a new EU CTIS regulation which came into effect earlier this year, also increased the regulatory cost for sponsors. But beyond that, many clients are focused on that bigger picture, especially the impact of tariffs and the proposed legislations like BioSecure Act. So now at a first glance, tariffs may not seem to directly impact clinical trials. That's because investigational products imported under an IND or IDE are typically imported duty free. However, tariffs can still affect the cost of bringing in trial supplies, equipment, and raw material. Right? Therefore, clients are looking to diversify their global supply chain especially for the critical components like active pharmaceutical ingredients, many of which come from countries like China. So while tariffs may not hit the bottom line right away for a clinical trial, There is a growing concern about the long term feasibility and trial continuity, and that's what we are hearing from the companies we work with. Okay. But, Julia, let me ask you the same question. So from we've heard Kush talking about this from a clinical perspective. But in a pharma and a biotech perspective, what are you hearing? Yeah. So I you know, I think to build off of what Kush is saying, you know, companies start in clinical trials, but they have the end goal of getting to commercialization. Right? So whatever they've started within their clinical trial, what API they've used, what they've studied there, that has implications down the road. Right? So a lot of companies are having concerns about, hey. I've thought about this supply chain. I'm using this API, this container closure system. I use that in my trial. If I make changes, what implications does that have when I'm gonna submit the full application, when I'm gonna go to commercialization? Right? So there's a lot of hesitation in this uncertainty period where clients are trying to figure out how do I come up with all the strategies I possibly can for any scenario that's gonna happen. So that that's what I'm hearing. Okay. And, Sarah, same question for you. This is almost like having your friends do an exam and hand you the question, Sarah. You've had plenty of notifications. But the medical device sector is probably the most globalized of all of these sections in clinical, pharma, and so on. What are you hearing from companies in the device side of things? Certainly, uncertainty is the theme. We, in the medical device space, may have the ability to, store goods for longer. And so having the supply chain and the distribution channels may be full, but looking forward to, okay, well, how are these these terms going to impact the future strategies? I think on the start up front, a big concern is, funding strategies. So how the whole, structure of a design is selected, you know, maybe resting on some some now outdated cost models. And I think, you know, what I'm hearing from from customers is and and clients of of mine is just a a real theme of uncertainty and trying to figure out how to pivot on plans moving forward. Okay. So I'm gonna stick with you on on this one, Sarah, because that's quite interesting about, you know, how do they deal with the uncertainty. What can companies do to deal with the threat of tariffs? Because okay. In the device section sector, companies in your sector have already been hit by this. So what what are they doing and what can they do? So there are a couple of strategies I think that would be good for any company to to do with or without the tariff territory that we're in. And I think the first is really understanding the classification of the materials that are being imported. Often, those brokerage statements are sometimes like a a throwaway checklist that are are not really given a lot of attention and thorough thorough review. So doing a really good review of all of the materials, components, semi finished goods that are coming in and really understanding if they've been classified appropriately. And then thinking about potential opportunities for tariff reengineering. So are there parts of the overall operation that can be insourced so that you can reduce the value of the materials coming in? Can you do more inspections internally? Can you do more software loading internally? Can you do more packaging or finishing operations internally so that you're still getting the kind of material or IP that you've selected potentially from a foreign partner, but doing more of that work, internally can reduce the value. So that's one, one thing that's very tactical. And then reviewing your, quality agreements to think about what does the back and forth look like. Do you know you're getting good material first time in? Because sometimes you might need to rest on, you know, a return material or, maybe it's not as good as you expected or you're having higher scrap rates than than you anticipated. So really going back to reduce the amount of times you have to do returns, and looking at the, maybe prereview of acceptance criteria and records before that shipment is made. You really wanna reduce the flow of goods too many times through the supply channel. Yeah. Julia, I saw you nodding your head quite a bit during that. In terms of the pharma side of the business, what what can companies do? Because, again, you know, we've looked at supply chains there with Sarah in terms of devices. But in terms of pharma, what can that industry do? Yeah. I, you know, I I think some of the strategies that Sarah discussed with devices can also be helpful for pharma. I think it's important to take stock of all of your APIs, the recipients. Sometimes if you have a combination product, you have to look at it from the drug end to device aspect. Right? But there could be situations where, you know, you try to diversify diversify your supply, get API from multiple locations, maybe with lower tariffs, and then start doing those early analytical tests. So do comparison, see if you actually can use API from different sources, or maybe it's worth it that you're gonna have to pay the higher cost of importing the API from a higher tariff region because the quality is better. Right? So start doing those assessments now and have an understanding of what impacts your product, and then start gaming through the regulatory impacts and how the cost can change based on whether you need to submit a supplement and get approval before you implement the change. So really trying to think through all the different options and how that will impact cost. I'm gonna come back to your point in a moment of denial. But finally, on on this round, Kush, what can companies do who are at the clinical stage, or what are they doing? So we are finding that small and mid sized companies are especially vulnerable right now. They often don't have the financial flexibility to absorb unexpected cost or disruption. And that's why most sponsors are turning to global CROs like NSF for support. We are working closely with them to rethink their vendor strategies, diversify their supply chains for the trial supply, and build out early scenario planning and risk models. We are also helping them explore decentralized trial technologies and simplify protocol because reducing complexity is one of the most effective ways we can keep cost under control. Okay. So we're at an interesting stage. So to touch on your point, Julia, about the now, what should companies be doing right now, you know, today on May 6 or this week to prepare? Because whilst Sarah's slide of the business has already been impacted by April 2 and other announcements, pharma is, right now, exempt. But as we've seen over the weekend with the announcement about the the tariffs with the aim of bringing business back to Hollywood in the in the movie, motion picture side of things, these could strike at any moment. So what should they be doing now? Yeah. I I think they should really be focusing on planning, talking to experts that can help them strategize what the best way forward is. I think, in general, even if tariffs were not a concern, this is a good strategy for companies to really take stock and see how resilient they are to any kind of impact to business. So I think, you know, reaching out to experts and developing those plans, particularly for regulatory implications because the space is regulated. I've seen a lot of companies as well try to use artificial intelligence to help them game out and and look at weaknesses they might have in their portfolio. So that that's what I would be recommending to clients. Yeah. It's it's interesting you mentioned the the AI piece because it was not good, I think, over the weekend in the Financial Times, one of the world's top 20 pharma companies is using AI to, as you said, game out their supply chains now. Sarah, I'm gonna ask you the same question. So in your sector, it's a it's a life issue. It's not a Yeah. An issue that might happen. It's life. So what should so for the companies that haven't done anything yet. Right. They were possibly taking the pain right now. What should they be doing? Well, I think beyond what we've already talked about with looking at supply chain and really understanding what materials you have and what's impacted, I think another key area they should do today is know who your trade organizations are that you can, engage with. Sometimes our voices are small individually, but those trade organizations are doing a lot of work on the front of, petitioning for exclusion and investigations on different types of sources. So AVAMed, the American Manufacturing Association, those all have, collective, collective power to really take forward the concerns of the industry. And I think that's another key area that, sometimes organizations don't feel they have the time or wherewithal to really engage with, but those organizations are doing some really solid work on behalf of of the industry. Yeah. Harold, just wanna bring you back in a good stage on the general business landscape. And so, you know, Sarah, like you said, engage with AvaMed and other organizations. Dr. Julia Marré was talking about, you know, new ways of reengineering supply chains. Is there anything else with general business perspective or even in terms of how companies and their public affairs teams are operating that we should be mindful of at this stage? Yeah. One, I there's a few points that I wanna go around here and and touch on. Sarah had talked about uncertainty, and so, you know, absolutely, this uncertainty is is what's what's driving a lot of a lot of concern is just trying people trying to make decisions. So to address that uncertainty, I I think it it behooves any company to be, you know, preparing, what is the impact. You know, how how many people do they, you know, employ? What is what is the economic impact of what what they're doing? You know, and and and what what do these tariffs mean to their companies? In addition to going to the trade associations, I would actually advise that people start engaging with their federal elected officials here in The US, if you're a US based company, and letting them know what that impact is. And while we're not talking about try to be a little careful about partisan politics, if you happen in a Republican district that that might give you a little bit of good voice to to be in there talking to them. So, you know, that that is, you know, absolutely. And then especially, I think, you know, Kush point on small and medium businesses, That is, doubly true of them. They they need to be absolutely because they're the ones who have less flexibility, less ability to, adjust their supply chains, you know, possibly adjust who they're selling to. Just just a lot of it. They're a little bit more constrained, and so these, you know, potentially gonna have a bigger impact on them overall. And so, just being prepared with what these impacts are and sharing that and then working, to educate, elected officials and then work, again, to the point from Sarah about and you can trade associations and different groups. That is what is gonna gonna really have, an impact so that, you know, as these exceptions exemptions are are are rolled out, you know, they are hopefully, there. The the other point I wanna make, Brian, is that we are expecting to start seeing some, trade agreements being reached, with foreign countries maybe as soon as this week. No no guarantees. I don't know. But that's you know, there's certainly, you know, a lot of push for that. And so, you know, as that happens, you know, we we might start to see a little more certainty enter in to to, what's going on. People can start making those decisions with a little bit, clear guidance. What did they say? Knowledge is power. Yep. Thanks very much for that, Harold. Just before I come to you, Kush, just just for anyone who's on the roundtable today, don't forget you can submit your questions through our q and a button, which should be on the right of your screen, and we'll be coming to our q and a in just a moment. But, Dr. Kush Dhody, for you, in terms of the the right now, you know, lifting and shifting a a clinical trial is not the easiest thing in the world. I mean, apart from that, what should companies be doing? So right now, companies should be focused on anticipating and planning. Right? What we the how we are supporting our clients by forecasting tariff related cost across the entire trial life cycle. We are also conducting an in-depth risk assessment and help design the contingency plan so the sponsors are prepared not surprised. Okay. So just on the the the general piece then, so not to be surprised to to anticipate it, but I suppose to be ready at at almost any moment and to have things reengineered. That ties in very nicely, Dr. Kush Dhody, with a question I'm gonna put to Sarah, that came in during the week, last week when people were booking in for this. Sarah, how can start ups, which are often cash strapped or, you know, emerging device companies, how can they prepare? Because the media coverage as we've seen it for pharma, for clinical, for medical devices has focused on the big players. Mhmm. But the cash drop companies, they probably have a a heavier lift. So what would your advice be companies in that sector? Yeah. So I think knowing the economic impact will be essential for startups to know what funding strategies they're pursuing. And I think bringing supply chain in as a very integral party to the overall design and development process is is critical as well. Often, you'll have your r and d teams doing their their, you know, very good high level brainy designs early on and not necessarily considering the financial impact of those selections. So bringing the supply chain in to the early stages of design and development along with quality, along with regulatory. So the full cost modeling can be done in the early stages. That will build a good foundation for pursuit of funding, and that needs to be done sooner rather than later and, done in iterative approach. So con continuously looking at those impacts. Okay. Thanks for that, Sarah. Julia, a question came in last week, and I thought I put it to you because of your many years at the FDA. One of the questions was, how do you what do you think this tariff environment will impact the FDA's inspection strategy or the approach that they'll take in in countries such as India, China, rest of Europe? Yeah. I don't think tariffs will impact how FDA operates to a large extent. You know, in in general, when when you're at FDA and you're reviewing applications, you're concerned about the science and whether the data supports the conclusions made in the application. We would often see arguments on, well, this is cost saving and such and and that's a little that that's not really the focus of their review and the inspection. It's you're still gonna be required to manufacture under cGMPs to provide data to support your claims. So I don't think it will impact FDA's operations. What I will say is it is important to bring external parties to look at your operations because I think sometimes when you're inside the problem in a business, it's hard to see the holistic view. So that's something that companies can be doing is bringing in third party experts to really take stock of everything from, you know, development through commercialization to what Sarah was speaking to, seeing that full picture. Excellent. Harold, I'm gonna come back to you with a a business question rather than a a government affairs or public affairs question. In terms of where we are right now, what's the current sentiment in terms of the investment community, when we're looking at life science start ups, life science early stage companies in terms of investment? What are you hearing from the market? Well, I mean, I think that comes back this. I mean, it's it's just it's uncertainty. And so, you know, people are trying to make their decisions, you know, but they they don't have, you know, the information that they want or need. And so, you know, I I do think that yeah. Well, I think there probably are investments going on. I think you also probably have seen some that have paused, you know, and, you know, will be forthcoming. So, you know, decisions that, you know, maybe were gonna be made this month, get made next month. So, you know, it's at some point, you know, this is all gonna people figure this out, but, I just I just see it as a a pause, right now, potentially, you know, a slope or maybe a slow bounce. Not everybody's gonna pause, but, you know, a little bit less, investment to until until we figure out where invest. Dr. Kush Dhody, let me come to you before we wrap up. Very quickly, in terms of the logistics of a clinical trial, this is bound to have an effect. Am I right? Yep. So and, again, what we are recommending our clients is to be proactive rather than reactive. Have that alternate strategies figured out as you go in, not put all your acts in one basket. Right? That's the approach we are like. So that's the focus right now. Do as much as planning upfront to to prevent those disruptions. Because our focus is we wanted to ensure no matter what the trial goes on, how the landscape shifts doesn't matter. Right? Like, that's our objective for our clients. Okay. With two minutes left, before we finish up, does anyone want to have the final word? Anyone want to to sum it up in a neat little package? I think the words that strike me are be prepared or be proactive. Anyone else want to jump in? I'd say also, you know, trying trying to just stay up to date on on what's happening as well. Right? Because it is evolving. So stay proactive, and then also be be ready to evolve with with changing information. Can't agree more. Couldn't agree more. Thanks very much, Dr. Julia Marré, for that. And, of course, on the NSF website and on the NSF page, we'll be keeping you up to date. And we have many, many tariff related, pieces to come in the coming weeks and months. That's it. Thank you very much for joining us today. I'd just like to say thanks very much to our speakers, to Harold Chase, Kush Dhody, Julia Marré, and Sarah Moore. I also want to say thanks to our producers today, Paul O'Mahony, Mary Anne Bellata, and Tony Riggio. And thanks to you for your time, with us today and for registering and taking part in our webinar. There's a couple of questions we didn't get a chance to get to. We will get back to all of those or as many of those as possible by email in the coming days. But, again, thanks very much for your time, and we'll talk to you soon.