Brussels hailed the EU-US trade agreement as a “stabilising force” in uncertain times. But the deal has rattled Europe’s pharmaceutical sector, with a 15 per cent tariff on EU-made medicines now on the table. The uncertainty has already triggered a wave of research and development investment announcements in the United States. Reinforcing a trend: innovation is going west.
While the White House calls the deal a “generational modernisation of the transatlantic alliance,” companies and experts warn of strategic recalibration. The tone is triumphant: “Trump is challenging the theory that tariffs are terrible for the global economy … The economy is growing. Inflation is stable. The stock market is booming … It is a remarkable success,” said Wall Street Journal Editor at Large Gerard Baker.
European Commission President Ursula von der Leyen described the agreement as delivering “stability and predictability”. Ironically, it’s US predictability that’s now pulling pharmaceutical innovation away from Europe.
Tariffs on medicines are a blunt instrument that will disrupt supply chains, impact on investment, and ultimately harm patient access to medicines on both sides of the Atlantic. – Nathalie Moll, Director General of EFPIA
Even as the European Commission proposes a Life Sciences Strategy and a Critical Medicines and Biotech Act, it risks undermining these goals with a trade policy that may penalise a strategically important sector.
“Tariffs on medicines are a blunt instrument that will disrupt supply chains, impact on investment in research and development, and ultimately harm patient access to medicines on both sides of the Atlantic,” warned Nathalie Moll, Director General of European Federation of Pharmaceutical Industries and Associations (EFPIA).
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She urged the EU to rethink its innovation model. Ms Moll also warned Europe must “significantly increase what the region spends on innovative medicines and create an operating environment that can accelerate turning Europe’s great science into new treatments.”
Innovation is the battleground, the US is winning
Research and development (R&D) is the beating heart of pharmaceutical innovation. But while the EU talks of becoming a global science powerhouse, leading pharmaceutical and biotech companies are voting with their investment plans. And they are increasingly voting for the U.S.
IQVIA, US-based company focused on health information technology and clinical research, has recently published a study called Global Trends in R&D 2025 with a clear outcome: the United States continues to solidify its dominance in pharmaceutical innovation. U.S.-headquartered companies accounted for 35% of global clinical trial starts in 2024. That is more than China (30%) and far ahead of Europe (21%), whose share has dropped from 44% in 2009.
The U.S. remains the most common first-launch country, with 110 new active substances (NAS) from 2020–2024 still unavailable in Europe. The U.S. also leads in first-in-class medicines, especially in oncology, neurology, and gene therapies. In 2024, 58% of U.S. NAS were first-in-class, 93% were specialty drugs, and 72% carried orphan designations.
This innovation pipeline is propelled by a regulatory environment that supports expedited reviews, contributing to shorter development timelines. As Europe’s role in global trial execution contracts, the predictability and scale of the U.S. ecosystem continues to attract biopharma investment.
These trends point to a consolidated ecosystem where advanced science, capital, and policy alignment are all working in concert. Europe, however, has so far struggled to replicate such conditions.
Corporate strategy shifts, innovation goes west
AstraZeneca’s U.S. investment story exemplifies this shift. According to The Guardian, AstraZeneca CEO Pascal Soriot “praised the US repeatedly for spending 0.8% of GDP on pharmaceutical innovation,” while calling on Europe and the UK to increase their current level of just 0.3%.
The company, which is based in the U.K., has announced a $50bn U.S. investment plan over five years, aimed squarely at reinforcing its innovation footprint. That includes expanding its R&D facility in Gaithersburg, Maryland, and launching a state-of-the-art R&D centre in Cambridge, Massachusetts. AstraZeneca is also building new facilities to supply clinical trials and scaling its R&D capabilities in novel medicines.
Novartis, a Swiss-based pharma corporation, is dramatically expanding its U.S. innovation presence, too. In April 2025, the company announced a $23bn five-year plan, including a $1.1bn biomedical research centre in San Diego, its second global R&D hub in the United States. The facility will tap into America’s deep biotech talent pool and strengthen Novartis’ drug discovery efforts. CEO Vas Narasimhan cited the “pro-innovation policy and regulatory environment” in the U.S. as a decisive factor behind the move.
The San Diego site is expected to become operational between 2028 and 2029, complementing Novartis’ existing hub in Cambridge, Massachusetts. It represents a direct challenge to Europe’s efforts to anchor innovation at home.
Roche: betting big on American R&D
Roche is making a similar pivot. The Swiss giant has launched a $50bn U.S. investment initiative spanning R&D and manufacturing. The company plans to open a new R&D centre in Massachusetts focused on AI-driven drug discovery and cardiovascular, renal, and metabolism research. It is also expanding R&D sites in Arizona, Indiana, and California.
“Our investments of USD 50 billion over the next five years will lay the foundation for our next era of innovation and growth, benefiting patients in the U.S. and around the world,” the company said.
The United States remain the undisputed global leader. This landscape continues to attract global players. – 2025 United States Life Sciences Industry Report
The strength of the U.S. innovation ecosystem goes beyond individual corporate investments. As noted in the 2025 United States Life Sciences Industry Report by Global Business Reports: “The nation remains the undisputed global leader, powered by world-class research, robust investment, and dynamic innovation hubs stretching from the established centers in California and the Northeast to burgeoning regions across the country. This landscape continues to attract global players.”
The EU’s innovation paradox
Europe’s problem is not a lack of talent or science, it is a lack of predictability, incentives, and urgency. Policymakers continue to call for European “health sovereignty,” but R&D strategies suggest companies are preparing for a future elsewhere. That future is increasingly American.
The Choose Europe for Science campaign and the EU Life Sciences Strategy risk being overtaken by events. Without bold reform, Europe’s ambitions may soon ring hollow.
The US-EU trade deal may be the final push many companies needed.
