Geopolitical lock-out tops life sciences economic risks: Willis

Geopolitical tensions have become the leading economic risk facing the global life sciences industry, according to new research from Willis.

The broker’s report, “Managing the new economic risks in life sciences”, found concerns over geopolitical fragmentation are increasingly influencing where companies develop, manufacture and sell products.

The research, based on responses from senior executives and risk professionals across North America, Europe and Asia, marks a shift from Willis’ 2024 study, when pandemic-related risks featured more prominently.

Willis said companies are now more focused on geopolitical rivalry, pricing pressure, trade uncertainty and government intervention.

The report identified “geopolitical lock-out” as the sector’s leading economic risk, reflecting concerns that political tensions could restrict access to important markets, suppliers, research partners and sources of innovation.

This risk is becoming more significant as governments increasingly treat life sciences as a strategically important industry.

US pricing and payment reform ranked second, with executives concerned that efforts to bring American drug prices closer to those in other developed markets could reduce revenues, alter launch strategies and affect funding for pharmaceutical innovation.

Willis also highlighted growing divergence between the US and Europe.

Both markets are seeking greater supply chain resilience and domestic production, but differing regulatory, pricing and policy approaches are making cross-border operations more difficult.

Competition for public healthcare funding is another growing concern, as rising costs, ageing populations and workforce pressures increase tension between spending on medicines and other healthcare priorities.

Tariff volatility is also influencing manufacturing and investment decisions, complicating long-term planning for companies with global supply chains.

Sam Wilkin, director of political risk analytics at Willis, said: “Our research suggests companies are no longer managing geopolitical risk as a standalone issue, they are having to factor it into decisions about investment, manufacturing, innovation and market strategy.

“The challenge for leaders is not simply responding to one-off shocks, but navigating a world where geopolitics is becoming a permanent and central feature of the business environment,” he added.

The full WTW report can be downloaded here.