Winning Strategies For Life Sciences In A Converging Policy Landscape
By Kristin Ciriello Pothier and Christine Kachinsky
2025 has been a whirlwind year thus far for the life sciences industry as the sector continues to grapple with a diverse set of evolving challenges. The simultaneous impacts of global trade shifts, U.S. tax reforms, and changing drug pricing policies have prompted companies to reevaluate both their short term and longer-term business strategies. As the sector enters the final stretch of 2025 and begins to look ahead to 2026, an integrated perspective with robust scenario planning is critical for organizations seeking to not merely manage risks but rather thrive and grow.
Adapting To Trade Policy Changes
Trade policy shifts are significantly impacting the life sciences landscape. The sector, once relatively insulated, continues to grapple with heightened uncertainty related to potential tariffs on imported medical devices and pharmaceuticals due to ongoing Section 232 investigations. For years, companies optimized their operations based on a predictable trade environment, but that stability has been replaced with an evolving policy environment. Leading organizations are regularly updating their scenario planning to actively reassess their sourcing and manufacturing strategies as they head into 2026. The key consideration is not whether to act, but how swiftly these strategic recalibrations can take place to address risks in the near term and while exploring long term opportunities.
Balancing Tax Reform Opportunities And Complexities
The "One Big Beautiful Bill Act" (OBBBA) signed into law in July 2025 presents a myriad of considerations for leaders to evaluate regarding their operations. Domestically, the legislation offers incentives for relocating and investing in U.S.-based operations. For instance, companies can now permanently deduct domestic R&D expenditures, a move intended to drive increased innovation within U.S. borders. Additionally, provisions for bonus depreciation on new manufacturing facilities enhance the financial case for domestic investment. Emerging biopharma companies benefit significantly through both current and retroactive deductions of previously capitalized U.S. R&D expenses.
However, these advantages come with complexities, especially regarding international tax provisions. Changes in the Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) tax codes require thorough reviews of financial models underlying global operations. Organizations that effectively navigate the balancing act of opportunities alongside complexities will be best positioned to capitalize on advantages while managing potential risks. This involves adapting processes and enhancing internal capabilities to navigate the nuanced landscape of international taxation.
Responding To Drug Pricing Shifts
Simultaneously, the government's “most-favored-nation” (MFN) drug pricing policy is reshaping the U.S. market. By aligning U.S. drug prices with those in other developed nations, the policy shifts the focus from if pricing will face pressures to how organizations will adapt. Proactive adaptation can help sustain a competitive market presence and foster innovation. This shift prompts companies to consider impacts to launch sequencing, market access, and investment in innovation pipelines — including the ability to fund inorganic pipeline asset acquisition. These considerations are important for maintaining industry competitiveness and require timely attention.
Winning With An Integrated Perspective
Addressing the multitude of economic and regulatory forces impacting the life sciences sector in isolation risks overlooking critical dependencies. For instance, deciding to build a new U.S. manufacturing facility is more than an operational choice: it’s also a strategic one that requires thoughtful site selection considerations, including labor, infrastructure, and economic incentives, in addition to leveraging OBBBA tax incentives. Viewing these policy shifts as interconnected elements is critical to provide a comprehensive strategic picture for leaders, helping companies align their operations effectively.
In today’s high-stakes environment, success isn’t just about weathering the storm — it's about knowing the rules of the game. The real winners in life sciences will be those who break down silos and proactively collaborate across finance, tax, and strategy functions. By approaching these converging forces strategically, organizations can seize opportunities, outpace disruption, and set the pace for long-term growth.
About The Authors:
Kristin Ciriello Pothier is the KPMG Americas Life Sciences Sector Leader, as well as the Global and National Healthcare and Life Sciences (HCLS) Deal Advisory & Strategy Leader. With almost 30 years in strategy consulting and scientific and clinical research in the healthcare and life sciences industries; her areas of focus are commercial strategy, growth strategy, and M&A for pharmaceutical; diagnostics, device, and consumer health companies; investors; and medical institutions worldwide. She is a leader in precision medicine and in clinical diagnostics laboratory innovation, developing product and service strategies and operations with on-the-ground experience in the Americas, Europe, Asia, India, and the Middle East. Her book, Personalizing Precision Medicine, has garnered attention worldwide for its all-inclusive and comprehensive look at global precision medicine.
Christine Kachinsky is KPMG’s U.S. National Tax Sectors Leader and Life Sciences Tax Industry Leader, as well as a member of the KPMG U.S. Board of Directors. Christine is based in Denver, Colorado, after relocating from New Jersey where she led KPMG’s NJ tax practice. Her 30-year career at KPMG includes a number of leadership roles in the firm, as well as in client service delivery. As KPMG’s U.S. National Tax Sectors Leader, Christine is responsible for the firm’s sector-led approach to the clients and markets we serve, ensuring KPMG is bringing sector-focused insights and expertise to solve our clients’ most complex challenges. In her role leading the Life Sciences sector for tax, she leads teams providing tax, audit and advisory services to the top biopharmaceutical and medical device companies in the world.