Pharmaceutical production growth to level off in 2026

Atradius Kreditversicherung's June 2026 industry trends report indicates that global pharmaceutical production, which grew 9.0% in 2025 largely due to front-loading ahead of anticipated US tariffs, is expected to level off in 2026. This deceleration follows the previous year's surge and is influenced by reduced production in the first half of 2026.

The report notes that the Gulf conflict has had a limited direct impact on pharmaceutical output, as the Middle East produces only a small share of global pharmaceutical ingredients. However, increased oil and gas prices have raised manufacturing and transportation costs. Cold-chain logistics, active pharmaceutical ingredients (APIs), packaging, and air freight remain vulnerable to prolonged disruptions, though recent developments suggest a fragile de-escalation. A continued flare-up closing the Strait of Hormuz could contract growth by 0.8% in 2026.

The impact of recent US tariffs is expected to be minor, as they primarily apply to patented drugs, with exemptions granted to most major producers. However, industrial policy is set to play a larger role. The COVID-19 pandemic and geopolitical tensions have highlighted vulnerabilities in national health systems, spurring efforts to reduce import reliance and incentivize local investments and strategic stockpiling.

Overall, the industry maintains robust financials and access to financing for R&D. Challenges include a significant patent cliff extending to 2030 and government efforts to control healthcare spending. Demand for premium products like biologics and GLP-1 weight-loss drugs remains strong, while AI is expected to boost productivity in R&D. Long-term demand in developed markets is supported by aging populations, while emerging markets benefit from increased insurance coverage, though cost controls may temper expansion.