Summary of "A Pharmaceutical Executive on Trump’s Tariff Strategy" Episode of The Journal

Release Date: July 28, 2025

In this insightful episode of The Journal, hosted by Ryan Knutson and Jessica Mendoza, the discussion centers around President Donald Trump’s recent tariff strategy targeting the pharmaceutical industry. The episode features an in-depth conversation with Richard Saynor, CEO of Sandoz, a leading global manufacturer of generic drugs. The dialogue explores the implications of these tariffs on the generic drug market in the United States, the challenges faced by companies like Sandoz, and the broader need for structural reforms within the industry.

Trump’s Tariff Announcement and Industry Response

The episode begins with Jessica Mendoza outlining President Trump’s announcement made at a Cabinet meeting earlier in the month. Trump declared a significant tariff increase for pharmaceuticals, stating:

“Give people about a year, a year and a half to come in. And after that, they're going to be tariffed. If they have to bring the pharmaceuticals into the country, the drugs and other things into the country, they're going to be tariffed at a very, very high rate, like 200%.”
— Donald Trump [00:11]

This policy aims to incentivize pharmaceutical manufacturers to relocate their operations to the United States. Mendoza highlights the immediate response from major companies such as AstraZeneca, which is expanding its U.S. manufacturing capabilities with a $50 billion investment, and Roche, committing $50 billion over five years. Additionally, Eli Lilly announced a $27 billion investment.

Sandoz’s Perspective on Tariffs

Despite these substantial investments from large firms, Mendoza points out that not all sectors within the pharmaceutical industry can adapt similarly. She introduces Richard Saynor, CEO of Sandoz, to provide a contrasting viewpoint.

Sandoz is a Switzerland-based company renowned for producing generic drugs—medicines whose patents have expired and are typically sold at lower prices compared to their brand-name counterparts. Saynor discusses the unique challenges generics face under the new tariff regime.

Impact of Tariffs on Generic Drug Manufacturing

Saynor elaborates on how the proposed 200% tariffs disproportionately affect generic drug manufacturers. He explains:

“This industry treats most of the patients most of the time in the US for a fraction of the cost. These are low-cost products frequently sold at pennies on the dollar. And so tariffs have a huge disproportionate impact.”
— Richard Saynor [01:58]

Given the slim profit margins inherent in the generics market, such steep tariffs could render manufacturing in the U.S. financially unviable. With most of Sandoz's facilities located in Europe, India, and Brazil, relocating production to the U.S. would require significant investment—costs that Saynor’s company is not prepared to bear without assurances of sustainable returns.

Challenges of US Manufacturing and Market Dynamics

When questioned about the feasibility of U.S. manufacturing, Saynor candidly admits:

“It would be loss-making because if I'm selling a pack of antibiotics... we lose money doing that and then we get a 200% tariff on that.”
— Richard Saynor [05:23]

He further explains that Sandoz’s ability to absorb these costs without passing them on to consumers is limited. During an earnings call, he noted:

“Anything beyond that then we will disclose when we get to our next earnings call.”
— Richard Saynor [06:12]

Saynor outlines potential strategies if tariffs impede profitability, including raising prices or withdrawing products from the market. However, he emphasizes a moral responsibility to maintain patient access to affordable medications.

Need for Structural Reforms in the US Market

Saynor advocates for comprehensive structural reforms in the U.S. pharmaceutical market rather than relying solely on tariffs. He states:

“Tariffs are a relatively simplistic tool that tries to address many problems through one action.”
— Richard Saynor [07:15]

He calls for discussions on creating a sustainable market environment that encourages investment, clarifies patent landscapes, and ensures fair competition. This perspective highlights the complexity of the pharmaceutical market and the inadequacy of tariffs as a standalone solution.

Comparative Analysis of the US Market

Saynor describes the U.S. market as "unpredictable" compared to more regulated environments in Europe and other regions. The necessity to engage in litigation for every product launch adds layers of uncertainty:

“In the US every time I launch a product, I have to go to court. And you know, if you go to court, sometimes you win, sometimes you lose. So there's an uncertainty there.”
— Richard Saynor [09:54]

Using Enbrel as an example, he illustrates how extended patents in the U.S. stifle generic competition. Amgen’s strategic use of U.S. patent law has effectively monopolized the market for certain drugs, delaying generic introductions and keeping prices high.

Role of Middlemen and Market Consolidation

Another critical issue raised is the consolidation of middlemen in the U.S. healthcare industry. With only three major buyers for generic drugs, intense price competition ensues, squeezing profit margins further. Saynor explains:

“If you've got 10 suppliers selling into three customers, what happens? Pricing goes down.”
— Richard Saynor [11:46]

Research cited in the episode reveals that generic manufacturers have a net profit margin of 18% in the U.S., compared to 28% for brand-name drug makers, underscoring the financial strain tariffs would impose on generics.

Future Outlook and Optimism for Sandoz

Despite these challenges, Saynor remains optimistic about Sandoz’s future in the U.S. market. He expresses confidence in ongoing conversations with the Trump administration and regulators to find viable solutions:

“I absolutely have no doubt our US Business will continue to grow... I want to work with an administration and with the regulators to find ways to bring more products more sustainably to warrant that investment.”
— Richard Saynor [13:22]

Saynor acknowledges the administration’s recognition of the need for change and sees the tariffs as a catalyst for necessary discussions on market sustainability and investment incentives.

Trade Deal Implications

The episode concludes by touching upon the recent U.S. trade deal with the European Union, which includes a baseline tariff rate of 15% on most goods. However, the applicability of this rate to European-made pharmaceuticals remains uncertain, leaving the future landscape for generics in flux.

“This isn't really a tariff conversation, this is a market conversation.”
— Richard Saynor [14:34]

Saynor reiterates that true progress lies in transforming the market structure to benefit U.S. patients, beyond the immediate effects of tariffs.

Conclusion

This episode of The Journal provides a comprehensive examination of President Trump’s tariff strategy on the pharmaceutical industry through the lens of a key industry insider. Richard Saynor of Sandoz offers a nuanced critique of the policy, highlighting the complexities of the U.S. generic drug market and advocating for broader structural reforms. The conversation underscores the delicate balance between encouraging domestic manufacturing and ensuring affordable access to essential medications for American consumers.

Notable Quotes:

• Donald Trump [00:11]: “…tariffed at a very, very high rate, like 200%.”
• Richard Saynor [01:58]: “These are low-cost products frequently sold at pennies on the dollar. And so tariffs have a huge disproportionate impact.”
• Richard Saynor [07:15]: “Tariffs are a relatively simplistic tool that tries to address many problems through one action.”
• Richard Saynor [09:54]: “So there's an uncertainty there.”
• Richard Saynor [11:46]: “If you've got 10 suppliers selling into three customers, what happens? Pricing goes down.”
• Richard Saynor [13:22]: “I absolutely have no doubt our US Business will continue to grow… find ways to bring more products more sustainably to warrant that investment.”
• Richard Saynor [14:34]: “This isn't really a tariff conversation, this is a market conversation.”

Produced by The Wall Street Journal and Spotify Studios. Additional reporting by Jared Hopkins, Kim McCrail, and David Wehner. Special thanks to Peter Loftus.