What a difference four months makes. In January, soon after Donald Trump’s inauguration as the 47th president of the United States, stakeholders and analysts were saying his second term in the Oval Office could be a net positive for the biopharma industry.
At the time, Trump’s presidency was met with a sense of optimism in the sector. At the J.P. Morgan Healthcare Conference in January, Thermo Fisher Scientific CEO Marc Casper said he expected a “better business environment” in the new Trump administration, including less stringent regulatory oversight of mergers and acquisitions and a “pro-growth” environment from a taxation perspective.
However, fast forward a few months and a sense of anxiety looms over the biopharma industry, thanks to Trump’s threatened tariffs on pharmaceuticals and his executive order reviving his controversial “most favored nation” drug pricing policy. While little is known about what either presidential action might ultimately entail, the potential impacts are weighing heavily on the sector and creating an environment of uncertainty and dread.
The Pharmaceutical Research and Manufacturers of America (PhRMA) warned earlier this month that Trump’s most favored nation executive order would “jeopardize the hundreds of billions our member companies are planning to invest in America — threatening jobs, hurting our economy and making us more reliant on China for innovative medicines.”
The Biotechnology Innovation Organization also criticized the executive order calling most favored nation (MFN) a “deeply flawed proposal that would devastate our nation’s small- and mid-size biotech companies,” while lambasting Trump for treating patients and families as bargaining chips in his trade war “first through proposed tariffs on our nation’s medicines, now with foreign reference pricing.”
On Tuesday, the Department of Health and Human Services announced that the MFN target price is “the lowest price in an OECD country with a GDP per capita of at least 60 percent of the U.S. GDP per capita” and that it expects drug manufacturers to “commit to aligning U.S. pricing for all brand products across all markets that do not currently have generic or biosimilar competition with the lowest price of a set of economic peer countries.”
The CEOs of biopharma companies are in the unenviable position of trying to navigate the chaotic situation and potential disruptions to their businesses. With the Trump administration’s cuts across federal health agencies, the biotechnology industry — which has been weathering a prolonged downturn — is particularly vulnerable.
“The uncertain macro environment has led to a material slowdown in biotech funding, which in turn has driven elevated cancellations and delayed decision-making from smaller innovators,” William Blair analyst Max Smock wrote in a May 22 report. “Given the challenging macro backdrop, biotech funding has continued to lose momentum since the end of the first quarter of 2025.”
Jefferies analyst Michael Yee in a May 16 note to investors said that the biotech sector “remains volatile” amid the recent MFN executive order and “lingering concern” about the FDA’s stability and tariffs. However, Yee said Jefferies analysts “expect negative sentiment to ease as details and clarity emerge (the recent trend has been that these events turn out better than feared).”
Currently, hoping for the best and preparing for the worst appears to be the only thing the biopharma industry can do in the face of such economic turmoil. According to Yee, the good news — if you can call it that — is biotech and pharma “outperform in recessions; this remains important amid broader uncertainty on the economy.”