We define “The Age of Continuous Disruption” as a series of interconnected and overlapping challenges, including natural disasters, geopolitical developments, and shifting trade policies, that became top of mind around the time of the COVID-19 pandemic. Our research shows these events have significantly impacted the predictability and stability of Life Science organizations, leading to increased risks and challenges for the industry worldwide. It also highlights how the industry can navigate these shifts by adopting strategic, data-driven approaches.
The Impact of Tariffs on the Life Sciences Industry
Tariffs have recently emerged as a key factor affecting global trade, particularly impacting the medical device and pharmaceutical industries. From February 2024 to February 2025, uncertainty in trade policy increased by approximately 800%, as measured by the Trade Policy Uncertainty (TPU) Index. Despite the challenges posed, companies that proactively adjust their strategies can position themselves for long-term success.
Source: Caldara, Dario, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo (2020), “The Economic Effects of Trade Policy Uncertainty,” Journal of Monetary Economics, 109, pp.38-59.
Potential Benefits of Tariffs
On the positive side, tariffs may incentivize companies to increase domestic production of medical devices and pharmaceuticals. This can reduce dependence on foreign supply chains and enhance the resilience of the U.S. Life Sciences market. For example, Eli Lilly recently announced a $27 billion investment to build four new manufacturing plants in the U.S., which will create over 3,000 jobs for skilled workers and 10,000 construction jobs. By raising import costs, tariffs encourage domestic production of critical medical goods, reducing reliance on foreign suppliers, potentially creating jobs, and enhancing national security. Such investments bolster domestic manufacturing capabilities and ensure a more self-sufficient healthcare infrastructure
Challenges Posed by Tariffs
On the other hand, tariffs can raise the cost of importing medical devices and pharmaceutical products. This increase in costs is often passed on to consumers, leading to higher healthcare expenses for patients and the entire ecosystem. Additionally, tariffs can disrupt supply chains, making it more expensive and challenging to source materials and components. This can lead to delays in production and distribution, affecting the availability of medical devices and pharmaceuticals.
Higher costs and supply chain disruptions can also reduce the competitiveness of companies operating facilities in impacted countries. To mitigate these challenges, companies must consider Smart Shoring strategies that reassess their manufacturing and sourcing approaches, and consider relocating production to other regions to mitigate the impact of tariffs. Smart Shoring ensures organizations remain competitive while adapting to evolving trade uncertainty.
The Role of Mexico in Life Sciences Manufacturing
Mexico plays an important role in the production of medical devices and pharmaceuticals. Imposing tariffs on goods imported from Mexico pose significant challenges for Life Science companies operating maquiladoras—manufacturing plants located along the US-Mexico border. A maquiladora is defined by the Mexican Secretariat of Commerce and Industrial Development – SECOFI, as a factory or manufacturing plant in Mexico that imports raw materials and components duty-free, assembles or manufactures products, and then exports the finished goods, primarily to the United States. These factories benefit from various tax incentives and are often located near the US-Mexico border.
Maquiladoras play a significant role in the manufacturing of medical devices and pharmaceutical products sold in the US market. Many of the leading Life Science companies operate maquiladoras located along the US-Mexico border, including:
- Tijuana: Boston Scientific, Medtronic, Novartis, Pfizer, Stryker, and Terumo.
- Mexicali: Bayer, Edwards Lifesciences, and Sanofi.
- Nogales: AstraZeneca and Becton Dickinson (BD).
- Ciudad Juárez: Cardinal Health, Johnson & Johnson, and Roche
- Reynosa: Abbott Laboratories, GlaxoSmithKline (GSK), Smith & Nephew, and Zimmer Biomet
With the imposition of tariffs, these companies must balance the benefits of existing operations with the potential need to restructure supply chains to mitigate cost increases and maintain efficiency.
Embracing Continuous Improvement and Innovation to Mitigate Trade Uncertainty
To navigate these challenges, it is essential for companies to embrace continuous improvement and innovation to thrive. Axendia emphasizes the need and importance of adopting agile and resilient strategies to navigate the complexities of modern supply chains. Continuous improvement and innovation initiatives are the foundation of resilience and can help companies optimize processes, reduce waste, and enhance product quality. .
Additionally, investing in innovation and technology, such as automation, artificial intelligence, and digital transformation, can enable companies to stay competitive and adapt to rapidly changing market conditions. By fostering a culture of continuous improvement and innovation, companies can build the resilience needed to succeed in the Age of Continuous Disruption
Smart Shoring and Future-Ready Technology
Axendia’s life sciences radar highlights the importance of smart shoring—strategically locating production facilities to optimize costs, logistics, and risk management. By leveraging future-ready technology platforms, companies can enhance their manufacturing capabilities, improve efficiency, and reduce dependency on any single geographic region. These technologies, including advanced robotics, the Internet of Things (IoT), and modern manufacturing execution systems (MES), enable companies to create more flexible and resilient supply chains.
Harnessing AI and Knowledge Management
Effective knowledge management is crucial for organizations to navigate the Age of Continuous Disruption. By leveraging AI and data analytics, companies can gain valuable insights into their operations, identify potential risks, and make informed decisions. AI-driven tools can also help optimize inventory management, forecast demand, and improve overall supply chain visibility. By harnessing the power of AI and knowledge management, companies can enhance their agility and responsiveness to disruptions.
In Brief: Strategic Decision-Making for the Future
Tariffs on goods imported from Mexico, along with a heightened Trade Policy Uncertainty (TPU) Index, create both challenges and opportunities for the Life Sciences, medical device, and pharmaceutical industries. While tariffs can increase costs and disrupt supply chains, they also incentivize domestic production and enhance supply chain resilience. As the healthcare sector navigates this complex landscape, strategic decisions and informed analysis will be crucial in mitigating risks and capitalizing on opportunities. Embracing continuous improvement, innovation, smart shoring, future-ready technology, knowledge management, and AI will be key to success in the Age of Continuous Disruption.
How can we help?
To navigate uncertainty and build resilience, pharmaceutical and medical device companies can gain valuable insights by engaging with Axendia industry experts. Our analyst team brings deep expertise in business trends, regulatory developments, and technology strategies, offering valuable insights to help Life Science companies optimize operations and drive long-term success.
Engage with Axendia to gain the tools and knowledge your organization needs to thrive in the Age of Continuous Disruption.
Related Content:
- Continuous Innovation and Improvement – The Cornerstone for Resilience
- Supply Chain Visibility: A Regulatory Necessity and Business Imperative
- COVID-19 Colliding with Your Supply Chain?
- Are “Black Swans” Colliding with your Supply Chain?
- Are Med-Tech Companies Walking the Global Tightrope?
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The opinions and analysis expressed in this post reflect the judgment of Axendia at the time of publication and are subject to change without notice. Information contained in this post is current as of publication date. Information cited is not warranted by Axendia but has been obtained through a valid research methodology. This post is not intended to endorse any company or product and should not be attributed as such.