Roche's medicines scored a tariff exemption from the U.S. government, but its $14 billion diagnostics business got left out in the cold. With a 150-day grace period ticking down and tariffs threatening from multiple directions, the Swiss giant faces a split personality problem that every healthcare conglomerate should be watching.
One Company, Two Very Different Fates
Imagine you own a house and a car. The government offers you free insurance on the house but leaves the car completely exposed. Great news for your living room. Not so great for your commute.
That's roughly where Roche finds itself right now. The Swiss pharma giant just learned that U.S. tariffs will treat its two major divisions like entirely different companies. Its medicines get a shield. Its diagnostics business gets a target on its back.
Roche Chairman Severin Schwan laid it out plainly this week: the company's agreement with the U.S. government should keep its pharmaceuticals tariff-free. But the diagnostics division? "Continues to be significantly affected," Schwan warned. And things could get worse once a 150-day grace period expires.
This isn't just a Roche story. It's a preview of how U.S. trade policy is splitting healthcare conglomerates down the middle, forcing executives to play defense on one side of their business while the other cruises along unscathed.
The Deal That Only Covers Half the House
Back in December, Roche struck a deal with the Trump administration involving drug price cuts in exchange for a roughly three-year tariff reprieve on its medicines. Companies that signed both a Most Favored Nation pricing agreement with HHS and an onshoring deal with the Department of Commerce locked in a 0% tariff rate. Those that only signed the onshoring piece still face a 20% rate.
Roche's pharma team is sitting pretty. Only four of Roche's medicines account for about 90% of its tariff exposure, and three of those are already manufactured in the U.S. The fourth is in the process of being transferred to domestic production. CEO comments have described the pharma division as being in "a very, very good position."
But diagnostics? Nobody at the negotiating table carved out an exemption for blood tests, lab analyzers, or glucose monitors. The pharma deal covers patented medications and active pharmaceutical ingredients. It does not cover the instruments and reagents that hospitals rely on every single day.
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A $14 Billion Business Caught in the Crossfire
Roche's diagnostics division generated nearly 14 billion Swiss francs in sales in 2025. A large share of those tests and instruments ship from Switzerland and other European facilities straight into the United States. That means they're walking directly into the tariff buzzsaw.
The pain comes from two directions at once. First, European-made diagnostics products face U.S. import tariffs (EU medical devices are currently hit with roughly 15% duties). Second, diagnostics products that Roche actually manufactures inside the U.S. still get hammered by tariffs on Chinese-sourced components.
Schwan called the situation what it is: paying tariffs twice. You get taxed bringing Chinese parts into America, then taxed again when finished products go back out to China. As a net exporter from U.S. plants, Roche is essentially penalized for having American manufacturing. The chairman described it as "absurd," and it's hard to argue with him.
The 150-Day Clock Is Ticking
Right now, diagnostics are getting a brief reprieve. President Trump's temporary 10% tariff on all imports, enacted under Section 122 of the Trade Act of 1974, is legally capped at 150 days. That's the grace period.
But Schwan isn't optimistic about what happens when the clock runs out. He explicitly expects the administration to reimpose tariffs under a different legal basis once the 150-day limit expires.
Section 232 investigations launched in September 2025 already cover medical equipment, diagnostic devices, and PPE. If Commerce concludes that relying on imported diagnostics poses a security risk, tariff rates could jump well above current levels.
Why Analysts Are Watching the "Wrong" Division
Wall Street has largely treated Roche's tariff exposure as a pharma story. Analysts view the drug business as well-insulated: production is moving stateside, pricing agreements are locked in, and the pipeline (oncology, ophthalmology, immunology) remains strong. The tariff narrative is "partially priced in," with fundamentals intact.
The diagnostics division tells a completely different story. Analysts describe it as the "weak link" in Roche's tariff profile. Not because the business is bad; Roche Diagnostics is a world-class franchise. The problem is structural. Diagnostics products have less pricing power than innovative drugs, less policy protection from government agreements, and more direct exposure to component-level tariffs.
Industry surveys paint a grim picture across all of medtech. 88% of healthcare executives expect equipment price increases of 18% or more by late 2025. For products tied to China and the EU, 94% expect increases of 33% or more. Those numbers ripple through hospitals, labs, and clinics that are already running on thin margins.
Roche's Long Game in Indianapolis
Roche isn't just sitting around waiting for relief. Its diagnostics headquarters in Indianapolis is the company's North American manufacturing and distribution hub. The site already produces roughly 5.2 billion Accu-Chek diabetes test strips per year and ships to over 50 countries.
The bigger play: a $550 million investment by 2030 to build out continuous glucose monitor (CGM) manufacturing at the same site. The Accu-Chek SmartGuide CGM launched first in Europe, but Indianapolis is being prepped as the global production base. Once those lines are running (targeted around 2028), Roche can supply U.S. demand domestically and reduce its dependence on cross-Atlantic shipments.
That's part of a broader $50 billion U.S. investment commitment across Roche's entire business, including a new $700 million biologics facility in Holly Springs, North Carolina. The message to Washington is clear: we're building here, so ease up on the tariffs.
The Bigger Picture: One Roof, Two Risk Profiles
Schwan was asked whether Roche might spin off diagnostics to simplify the tariff equation. His answer was blunt: the diagnostics spin-off is "not a matter of discussion at all" and Roche is "committed to it."
That conviction matters, because Roche's integrated model (drugs plus diagnostics) has been its strategic calling card for years. Personalized medicine works best when the same company develops both the treatment and the test that identifies who should get it.
But tariffs don't care about corporate strategy. They care about where a product was made and what category it falls into. And right now, U.S. trade policy has drawn a bright line between medicines (protected) and diagnostics (exposed). Every other healthcare conglomerate with feet in both worlds is watching Roche to see how this plays out.
The 150-day clock keeps ticking. When it stops, Roche's diagnostics division will need more than good intentions to stay whole.
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