Insurance Daily News

Geopolitical Risk Tops Life Sciences Outlook

A new Willis report, produced with Oxford Analytica, identifies geopolitical tension as the top economic risk for life-sciences companies through 2026-2027. The study, which surveyed senior executives and risk professionals across North America, Europe and Asia, found that firms must now embed geopolitical considerations into decisions on investment, manufacturing, innovation and market strategy. Sam Wilkin, director of political risk analytics at Willis, noted that the challenge is no longer responding to isolated shocks but navigating a business environment where geopolitics is a permanent factor.

The report ranks five leading risks for the sector, with geopolitical lock-out at the summit, followed by pricing pressures, trade uncertainty, healthcare cost pressure and regulatory divergence. Compared with Willis’s 2024 study, the focus has shifted from pandemic-related issues to fragmented operating conditions, as global research networks and cross-border supply chains face increasing strain. The timing coincides with expanding U.S. pharmaceutical tariffs: duties that began on July 31 for 17 large manufacturers were extended on September 29 to mid-size and smaller drugmakers, with rates that can reach 100 %. Companies that file an onshoring plan combined with a most-favored-nation pricing agreement may qualify for zero tariffs through January 2029, while generics and biosimilars remain exempt. Existing trade deals cap duty rates at 15 % for goods from the EU, Japan, South Korea and Switzerland.

For insurance brokers serving life-sciences clients, the findings translate into concrete coverage conversations. Geopolitical lock-out calls for reviewing political risk insurance, supply-chain disruption protection and trade-credit limits. The tariff window is time-sensitive; firms without an onshoring plan risk facing up to 100 % duties from February, with the zero-tariff exemption ending in January 2029. Growing U.S. pricing reform and transatlantic regulatory divergence suggest heightened D&O and regulatory risk exposure, as governments treat life sciences as a strategic sector. Healthcare cost pressure, already reflected in employer health-plan pricing, should be factored into 2027 renewal discussions for self-funded clients.

Why it matters

Understanding these geopolitical and tariff risks helps insurers and brokers tailor coverage for life-sciences clients facing rapidly changing global constraints.

FAQ

What is the top-ranked economic risk for life-sciences companies according to Willis?
Geopolitical lock-out is identified as the leading risk.

When do U.S. pharmaceutical tariffs reach rates of up to 100 %?
The expanded tariffs for mid-size and smaller drugmakers can reach 100 % from February, with a zero-tariff window lasting only until January 2029 for qualifying firms.

What coverage areas should brokers focus on for clients with operations in geopolitically exposed markets?
Political risk cover, supply-chain disruption protection, and trade-credit limits are recommended.

Source: Insurance Business America. See the original source for full details.