36TWENTYFOURSEVENBIOPHARMA Issue 1 / March 2026 LGM PHARMA To secure reliable API supply chains, pharmaceutical companies must qualify suppliers, diversify sources, maintain safety stocks and leverage digital tools. The critical challenges to pharmaceutical supply chains that surfaced during the pandemic – global shortages of raw materials, shipping disruptions and extended lead times – opened the industry’s eyes to the fragility of highly interdependent global networks. Since then, geopolitical instability and tariffs have heightened these concerns. Fortunately, companies can lessen the risks by implementing strategic sourcing strategies. The impact of tariff uncertainty As an example of the interdependence of global supply chains, European Union (EU) companies may source active pharmaceutical ingredients (APIs) from China or India, process and package in Europe, then export finished drugs to the United States – a chain where small policy shifts ripple end-to-end. As of February, 2026, tariff uncertainty persists, but most finished pharmaceutical products enter the US duty-free under the WTO ‘zero-for-zero’ pharmaceutical agreement. China-origin goods remain subject to Section 301 measures, with product-specific rates and exclusions. Many finished drugs (HS Chapter 30) still clear at 0%, while some inputs/intermediates (often HS Chapter 29) can face surcharges1-2. A US-UK deal (December, 2025) explicitly guarantees 0% tariffs on UK-origin pharmaceuticals. For EU exports, a 2025 framework has discussed a tariff cap of up to 15% on branded medicines – with generics and many ingredients unaffected – but implementation details are still evolving3. Even when duties don’t ultimately apply, tariff uncertainty drives earlier buying, higher safety stock and working-capital drag. Uneven regional tariffs can also shift competitiveness by origin, unexpectedly pushing some products out of contention. For thin-margin categories like generics, the risk of a sudden landed-cost change can negatively influence investment. Managing supplier vulnerabilities Sponsor and manufacturing procurement teams can no longer rely on ‘just-in-time’ delivery of APIs or other critical ingredients. Managing upstream risk
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