US tariff proposals targeting branded pharmaceuticals risk draining money from research and development and slowing future medical breakthroughs, Bayer’s Chief Operating Officer Sebastian Guth said in an exclusive interview with Arabian Business.
“Every dollar we spend on tariffs is $1 we can’t spend on research and development,” Guth said, calling the move a long-term trade-off that could blunt innovation far beyond any short-term financial effects.
“The impact may be felt in 10 or 15 or 20 years,” he added, noting the lengthy timelines and high failure rates in drug development.
US tariffs threaten global pharma trade
Guth’s comments come as the United States weighs new tariffs under President Donald Trump’s “America First Trade Policy,” which includes a proposed 25 per cent levy on imported pharmaceuticals from countries with trade surpluses – notably Germany, Ireland, Japan, and India.
According to PwC’s US Tariff Industry Analysis (March 2025), the measures could raise up to $76 billion a year in tariff revenues but drive up industry costs by as much as $63 billion annually, increasing drug prices and squeezing profit margins across the life sciences sector.
A national security review of pharmaceutical imports by the US Commerce Department, expected later this month, could determine whether branded drugs remain subject to tariffs. Trump has already paused a planned 100 per cent tariff on branded and patented medicines, using it as leverage to negotiate price reductions under the so-called TrumpRx initiative. Pfizer, for instance, secured a three-year exemption after pledging to lower prices and expand domestic manufacturing. Generics remain excluded from the current measures.
Guth described the global trade debate as “still fluid.”
“As you think about trade agreements, the ink hasn’t dried under any of these trade agreements… we are still in the midst of policy conversations in the United States and beyond,” he said. “And I think these are, frankly, in my mind, also needed conversations, because there is a kernel of truth in some of what the US government is raising.”
He acknowledged some of Washington’s concerns over pricing disparities, but warned that restrictive policies could undermine innovation worldwide.
“Patients in America today pay likely a greater share of… the innovation that’s happening in the pharmaceutical industry than patients in other wealthy countries around the world,” Guth said, noting that governments are now reassessing the “societal contract” between industry, regulators and patients.
Given the sector’s economics, Guth stressed the importance of stable policy frameworks.
“As an industry, what we need are predictable regulatory environments,” he said. “It takes, on average, around 15 years and roughly $2 billion to bring a new medicine to market, with more than 95 per cent of ideas failing along the way.”
On manufacturing, Guth said Bayer is reviewing its global supply chains to bolster resilience without sacrificing efficiency – a process accelerated by lessons learned during the pandemic.
“We, as everyone else, are reviewing our supply chains at this present moment,” he said, adding that the company is “collectively optimising for supply chain resilience” while managing costs.
While he declined to comment on specific US policy outcomes, Guth reiterated that tariffs threaten to divert vital resources from the science that drives the sector forward.
“If you ask yourself where we can have the biggest impact… then it is in advancing science. That’s what we want to spend our money on,” he said.
Beyond trade and policy, Guth outlined Bayer’s broader focus on therapeutic innovation, including multi-modal treatments for diabetes and cardiovascular disease, and an expanded women’s health portfolio with new menopause therapies. He said the company is using artificial intelligence to speed up drug discovery and advance cell and gene therapy research through late-stage trials targeting Parkinson’s disease.
“We’re pushing the boundaries of science in areas where there is still huge unmet need,” Guth said. “That is where we can make the greatest impact.”
He described the Gulf as an increasingly important base for science and innovation, citing the UAE’s regulatory clarity and investment in genomics and AI as drivers of future collaboration.
The full interview with Sebastian Guth will be published in a longer feature in Arabian Business’ November magazine.
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