Navigating geopolitical risk in the pharmaceutical sector

We live in an era where a daily “smorgasbord” of geopolitical events tests even the most resilient organizations.

The Chartered Financial Analysts (CFA) Institute defines geopolitical risk as “risk associated with tensions or actions between actors (state and non-state) that affect the normal and peaceful course of international relations”.

For the pharmaceutical sector, navigating these risks is not optional; it is critical to sustaining global operations, securing supply chains, and maintaining market access.

As an industry dependent on international collaboration, regulatory harmonization, and efficient supply, the ability to anticipate and respond to geopolitical disruptions has become a competitive necessity.

Key issues impacting pharma today

Regulatory changes - Political shifts can lead to sweeping changes in drug approval processes, intellectual property (IP) protections, and pricing regulations. A recent example is the US Inflation Reduction Act (IRA), which has dramatically altered the landscape of drug pricing, affecting revenue projections and R&D priorities across the sector.

Supply chain disruptions - Global supply chains remain vulnerable to geopolitical tensions. Trade conflicts between the US and China, ongoing debates around reshoring critical manufacturing, and export controls on key ingredients pose direct risks to pharmaceutical production and distribution.

Market access challenges - Political instability and evolving trade policies can restrict or delay access to key markets. The EU continues to face significant hurdles, with high energy prices and competitive pressures from China and the US reshaping the dynamics of pharmaceutical trade and investment within Europe.

Changing political administrations - The re-election of President Donald Trump signals the potential for new policies affecting trade, healthcare regulation, and pricing controls. Meanwhile, China’s evolving political agenda and Belt and Road Initiative are reshaping global trade routes and regulatory frameworks, influencing how and where pharma companies operate.

Implications and risk mitigation strategies

As uncertainty grows, pharmaceutical companies must develop sophisticated strategies to mitigate these risks and adapt dynamically. Here are some key approaches:

Adaptable business functions - Companies must build flexible, responsive organizational models that can pivot quickly in response to regulatory or market shifts—making agility a core competitive advantage.

Diversification of supply chains - Diversifying supply sources and establishing redundant supply chains across multiple regions can reduce dependency on any single country or supplier. However, this requires organizational readiness to operate under decentralized and complex sourcing models.

Regulatory compliance focus - Staying aligned with rapidly evolving regulations in critical markets not only mitigates risk of non-compliance but also ensures continuity of supply and market access. Partnering with experts in global regulatory affairs is vital to keeping pace.

Strategic partnerships - Developing alliances with local companies and stakeholders can improve regulatory navigation and market entry, particularly in regions affected by shifting political dynamics. These relationships can also provide insight into local risks and regulatory trends.

Scenario planning - While no scenario plan can fully predict today’s volatile environment, robust and regularly updated scenario modeling allows organizations to assess potential outcomes and build contingency strategies.

However, as we have seen, the speed and scale of some geopolitical decisions would challenge even the best-prepared firms, highlighting the need for ongoing vigilance and adaptability.

At G&L Scientific, we understand how deeply geopolitical risk intersects with regulatory strategy and product development.

Our Integrated Product Development and Market Access Platform helps companies plan, adapt, and thrive in complex, fast-changing environments.

From regulatory compliance and supply chain resilience to market access strategy, we collaborate with clients to turn risks into opportunities for growth and leadership.

If you would like to discuss these issues or explore how we can help, please reach out directly or visit our website here: www.gandlscientific.com

Paul Kuiken is Vice President of Advisory Services at G&L Scientific.