The global healthcare sector is entering a new phase of complexity and disruption — one that extends beyond technology, innovation, research and regulation.
Geopolitical shifts, economic volatility and evolving trade policies are re-shaping the industry’s dynamics. The recent US decision to impose 100 percent tariff on imports of branded or patented pharmaceutical products – unless the importer is actively building a manufacturing facility in the country – has triggered a wave of responses from major industry players. Roche and Novartis, for instance, have reaffirmed their US manufacturing commitments – the former has broken ground on a facility in North Carolina through its Genentech subsidiary while the latter highlighted a USD 23 Billion investment pledged earlier this year.
It is clear that healthcare’s deeply interconnected ecosystem is bracing for significant uncertainty from these tariff shocks. With duties extending to critical categories such as active pharmaceutical ingredients and medical devices, the ripple effects are expected to be profound – disrupting hospital supply chains, inflating drug and device costs, and constraining access to medical treatment, clinical trials, and research.
The High Stakes in Healthcare and Life Sciences
While these tariffs aim to strengthen domestic manufacturing, their timing and implementation pose serious challenges, particularly in a sector where delays can have life-threatening consequences.
Most healthcare enterprises already operate on thin margins, and absorbing tariff-driven price hikes could significantly affect both cost efficiency and the quality of patient care. Recent analyses reinforce this concern: a Yale University study estimates that the price of basic pharmaceuticals could rise by nearly five percent as a result of reciprocal tariffs.
The US also carries a heavy import bill for Active Pharmaceutical Ingredients (API), medical devices, and diagnostic equipment. A significant 72 percent of Food and Drug Administration (FDA)-approved API manufacturing facilities are located outside the country. Ironically, the steepest tariffs have been imposed on nations that supply critical inputs. This is expected to dent profitability across the value chain. Medtech companies have forecast major financial hits: Johnson & Johnsonanticipates a USD 400 Million slide, Philips expects losses of USD 280-340 Million, and Cardinal Health, anticipating an increase in costs of USD 200-300 Million, has begun workforce reductions.
The impact of these tariff hikes and trade frictions will span the entire healthcare and life sciences industry. Drug manufacturers will face constraints in producing essential medicines – 83 of the top 100 generic drugs in the US currently lack a domestic API source. Medical device manufacturers will contend with financial strain and added supply chain complexity. Healthcare providers, particularly in smaller, rural areas and non-profit hospitals, will risk shortages and delayed deliveries of essential supplies, directly threatening patient safety. Payers, meanwhile, will be under pressure to streamline operations in an increasingly cost-sensitive environment.
Charting the Next Steps in a Tariff-driven Reality
Even as tariff decisions continue to fluctuate – and, in some cases, risk violating existing trade agreements – their impact cannot be dismissed. The healthcare industry now faces a tangible, systemic risk that demands decisive strategies to safeguard business continuity, profitability, and quality of care. Organizations must act proactively, through digital transformation and deeper collaboration with the right partners, to build shock resilience into their operations.
To navigate this new environment, enterprises need to invest intelligently in transforming their healthcare supply chain management. Strategically, this includes diversifying supply sources through secondary hubs, leveraging domestic investments supported by government grants and tax incentives, and driving collective actions through Group Purchasing Organizations (GPO). Operationally, Artificial Intelligence (AI)-driven digital transformation, analytics, and blockchain will be central to building resilience in key areas such as revenue cycle management, demand forecasting, supply chain visibility, and vendor risk management.
Payers can embed intelligent automation, analytics-led quality assessment, and expert-driven process re-design to re-imagine and scale Diagnostics-Related Group (DRG) operations with agility and resilience. Advanced robotics, AI and Machine Learning (ML) can streamline workflows and lower operational costs. Generative AI platforms can deliver real-time insights and pricing forecasts, enabling organizations to dynamically refresh their contract management strategies. Complementing these, embedded risk intelligence measures can help monitor geopolitical exposure across supply chains and trigger rapid corrective actions when disruptions occur.
Advanced analytics platforms and tools – such as AI-led risk impact simulation system — can further strengthen preparedness. By modeling “what-if” scenarios and creating digital twins that anticipate how future tariffs or trade and regulatory policies might affect operations, organizations can take preemptive decisions to stay compliant and competitive in a protectionist landscape.
While the tariffs may be rooted in economic nationalism, this moment opens new possibilities for global collaboration and innovation. With the right partners – who combine deep domain knowledge with technology and process expertise – healthcare and pharmaceutical enterprises can re-imagine operations, accelerate digital maturity, and build an “always ready” resilience that turns uncertainty into opportunity.
As digital media innovator Jay Samit said, “Pivoting is not the end of the disruption process, but the beginning of the next leg of your journey.” Here’s to the next!
Dennis Thomas
Dennis Thomas is Business Unit Head, Healthcare & Life Sciences, for WNS.
