WILMINGTON — One of Delaware’s key industries is under the microscope as the Trump administration disclosed that an investigation into the national security implications of pharmaceutical imports has been underway for two weeks.
The investigations were launched under section 232 under the Trade Expansion Act of 1962 which allows the president to evaluate select imports and whether they pose a threat to national security. Following a report and feedback, the president can impose trade restrictions, tariffs or other actions as needed.
Public comments on the Section 232 probe are open for 21 days. A report is due to Trump in December.
This inquest targets both finished generic and non-generic drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients (APIs) and key starting materials, and derivative products of those items, according to federal documents.
For Mike Bowman, a former DuPont employee who now leads Delaware Technology Park, that’s a direct shot at one of the state’s fastest growing industries in an already expansive trade war.
“The biggest risk to our gains and growth is to our biopharmaceuticals, particularly the APIs. It’s a critical ingredient we’re lacking in the product, so if we start making it worse with tariffs, it’s hard to predict what the outcome will be,” Bowman said.
The White House has already imposed 145% tariffs on China, as well as existing tariffs on the country. A universal 10% tariff on nearly all other countries is still in effect, and businesses are waiting to see if another pause in more tariffs will result in more deals.
Not only has Bowman worked to help launch 150 companies through the Delaware Technology Park, but he also served on President Joe Biden’s advisory committee on trade policy. In his first meetings, he raised the issue of the U.S. reliance on China for APIs that are used in drugs and therapies developed here – one of many ways the international supply chain for life sciences is intertwined.
It’s becoming more critical than ever as the Wall Street Journal reported that the shortage of drugs in the U.S. is at an all-time high. Last year, the newspaper reported that the U.S. was short 321 drugs due to the lack of critical ingredients.
“While we are rallying as hard as one might possibly imagine making more APIs in this country, that’s billions of dollars and a lot of time,” he added. “I’ll say it is two to four years where pharmaceutical production, biologics, involved molecules will catch up with what we actually bring in.”
One major manufacturer that could be ahead in this arms race: WuXi AppTec. The 1.74 million square-foot facility was on track to open in 2026 and hire hundreds of workers to manufacture APIs for several companies.
WuXi representatives did not immediately respond to a request for comment. However, the Chinese pharmaceutical company had sold 50 million shares in order to raise $281 million for “the construction of global product capacity and capabilities” among other things.
Amid escalating tensions, experts and trade organizations believe that pharmaceutical companies with high U.S. sales and a large manufacturing footprint have more to lose, as offshoring that production has historically cut costs. Even smaller companies also rely on contracting out manufacturing for that service.
Biotechnology Innovation Organization, the largest bioscience advocacy group in the world, reported that 90% of U.S. biotech companies surveyed rely on imported components for at least half of their products.
The same survey showed that 80% of the members would need at least 12 months to find alternative suppliers – another 44% would need more than two years.
Delaware Bioscience Association President and CEO Michael Fleming said that when he started with the organization, it was the early months of the COVID-19 pandemic, and the industry was starting to consider supply chain vulnerabilities with offshoring manufacturing to China and India.
“I think there’s bipartisan goals in this, because it’s a global competition. We have to invest in this and have stronger capabilities,” Fleming said. “Delaware’s well-positioned to benefit from the goal of strengthening America’s manufacturing in key areas, with companies that have grown their capabilities over the years.”
Here in Delaware, AstraZeneca and Agilent Technologies are life science companies that employ hundreds of people and thousands more in facilities across the globe. AstraZeneca, which is based in the United Kingdom, reported that the U.S. accounted for 40% of its $54 billion revenue last year.
Last November, AstraZeneca announced that it would invest $3.5 million in a new facility in Maryland, part of its plans to continue regionalizing its supply chain. Company representatives declined to comment on the impact tariffs and the section 232 investigation would have, but confirmed that its Maryland facility was on schedule.
Agilent Technologies, headquartered in California, manufactures diagnostics instruments, software and consumables and has at least two facilities in northern Delaware. But it also has facilities and labs in Australia, China, Germany, Italy and other countries.
At the end of last year, Agilent completed its $925 million acquisition of API and biologics manufacturer Biovectra in Canada, right ahead of the first wave of tariffs with Canada and Mexico. Recently, Barclays investors slightly lowered their estimate on Agilent’s price target on the stock market, citing the threat of pharma-specific tariffs that could result in cut budgets. Company representatives declined to comment for this story.
