The proposed 25% tariff on pharmaceutical APIs from China could have far-reaching effects on M&A transactions within the life sciences and healthcare industries. Since a significant portion of pharmaceutical raw materials originate in China, companies may face increased costs not only in sourcing but also in sales, as Canada considers imposing its own tariffs. This could disrupt global supply chains, making due diligence even more critical for buyers evaluating international pharmaceutical and biotech companies. Traditionally, M&A analysis focuses on vendor agreements, but in light of these tariffs, companies must now assess the entire supply chain—including alternative sourcing options, regulatory approvals for suppliers, and potential delays in manufacturing. Some predict this will drive more companies to acquire U.S.-based API manufacturers to reduce dependency on foreign supply chains, especially if domestic tax incentives, such as potential Trump-era tax cuts, make U.S.-based production more attractive. If these factors align, the industry could see a shift toward reshoring pharmaceutical manufacturing and a surge in domestic M&A transactions as companies adapt to a changing trade landscape.

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