Tecentriq is a Swiss export hit. Now Roche's cancer drug could come under Trump's tariff hammer

Switzerland is considered the home of Emmental cheese, Lindt, and Rolex. But one of its most important products has a lesser-known name: Tecentriq. It's a cancer drug from Roche. The Basel-based pharmaceutical company earned 3.6 billion Swiss francs from the drug last year. The majority of sales went to the USA.

Tecentriq is a testament to Switzerland's export success. Over the past 15 years, exports by Swiss companies have doubled. Growth was particularly impressive in the United States, which has become the most important buyer of Swiss products. This is primarily due to pharmaceutical companies. Medicines now account for 60 percent of all Swiss exports to the United States.

But now this success story threatens to become a problem. Donald Trump's tariff policy is causing uncertainty. While medicines are exempt from the 31 percent punitive tariff that the US president imposed on Switzerland – and which the Federal Council is currently seeking to eliminate in negotiations with the US – Trump has repeatedly announced his intention to introduce industry-specific tariffs of 25 percent or more on medicines from abroad.

How would US tariffs affect an export hit like Tecentriq? And what would that mean for Switzerland? For answers, we need to trace the cancer drug – and explore its path from invention to production to sale.

This shows that medicines are not like cheese or chocolate. The pharmaceutical industry has highly complex, global, and largely unknown value chains. Anyone who wants to assess Trump's tariff policy must understand how these value chains work.

The Swiss export success begins with a perhaps surprising contribution from the Americans. Tecentriq's journey begins not in a Swiss factory, but in a research laboratory in California.

Genentech, a Roche subsidiary, is based in South San Francisco. Genentech researchers invented and developed the active ingredient in Tecentriq – called atezolizumab. The US company also holds the patent for it. Roche confirmed this upon request.

Patents are the lifeblood of pharmaceutical companies. Their use is the starting point for the commercial exploitation of drugs. Tecentriq is embarking on a journey across various national borders and through international trade statistics.

According to Roche, the commercial exploitation rights to the Tecentriq patent lie in the United States if the cancer drug is marketed in America. This has important implications. In this case, the parent company Roche pays a license fee for the use of the patent to its US subsidiary Genentech.

This fee appears in the statistics on international trade in services. These are figures that US President Trump consistently ignores when he only focuses on trade in goods and then complains about his country's large trade deficits. Yet the Americans are world champions in exporting services. They are also the largest supplier of services to Swiss companies .

The pharmaceutical industry imports most of its services. Companies like Roche and Novartis likely transfer billions each year to US firms for the use of patents or for research services. The US is the world's most important location for pharmaceutical research.

Roche can only begin production of Tecentriq once the patent fees have been transferred to the US. Like all pharmaceutical companies, the Basel-based company keeps its production process a secret. When asked, it does not disclose which factories the drug is manufactured in or in which countries these factories are located.

However, regulatory documents and discussions with industry insiders allow certain conclusions to be drawn. Drugs like Tecentriq undergo a highly complex production process. The active ingredient, atezolizumab, is produced using a biotechnological process in Chinese hamster ovary cells. In further production steps, the drug is created by adding excipients. After quality controls, filling, labeling, and packaging, the finished product is available – a vial containing 20 milliliters of Tecentriq as an injection solution .

What is certain is that the Roche factories in Basel and Penzberg, Germany , as well as factories in the USA, are involved in Tecentriq production. It cannot be ruled out that additional production sites in other countries, as well as contract manufacturers, are involved. Pharmaceutical companies usually rely on multiple production sites to ensure reliable delivery, even if one factory experiences problems.

The final product is ready for delivery to hospitals and cancer patients. US regulatory documents reveal the origins of the finished Tecentriq product sold in the US. Part of it comes from F. Hoffmann-La Roche Ltd. in Kaiseraugst, Switzerland. Part of it is supplied from the Genentech facilities in Hillsboro , Oregon.

Knowing the production routes is important for understanding international trade figures. When the finished Tecentriq product is shipped from Kaiseraugst, it counts as an export from Switzerland to the US and is included accordingly in Swiss export statistics. However, when the Genentech plants in Oregon deliver the finished product, at least this final step is considered a domestic transaction and does not appear in trade statistics.

Production routes also play a significant role at the upstream stages. For example, Tecentriq—like many other medications—is likely to cross national borders several times during the production process. This is relevant because the intermediate product is counted at its full value as an export from one country to another each time. This inflates the official foreign trade figures.

The mechanism can be illustrated using the example of Slovenia. This small Alpine country is Switzerland's third-largest export destination – ahead of countries like China, France, and the United Kingdom. In 2024, Swiss companies exported goods worth around CHF 26 billion to Slovenia.

But the goods aren't purchased by Slovenian consumers. 99 percent of Swiss exports are products of the chemical and pharmaceutical industry. Companies like Novartis and Sandoz, in particular, supply them as intermediate products to their Slovenian factories for further processing. They are then sent back to Switzerland. This also makes Slovenia Switzerland's third-largest supplier of goods. 98 percent of these imports are pharmaceuticals.

Switzerland is therefore partly a kind of flow heater: a drug goes from here to another country, comes back, perhaps goes to another country again, returns again, until it is finally exported as a finished product – like Tecentriq from Switzerland to America.

This raises the question of what proportion of the added value for a drug actually takes place in Switzerland. Federal statistics on economic added value suggest that, for the entire pharmaceutical industry, it is likely around 30 percent. This means that one-third of the production value is based on Swiss added value, and the remainder on inputs from abroad.

Nevertheless, Switzerland's strong integration into international supply chains is worthwhile. Thanks to the division of labor, the local pharmaceutical industry has grown significantly over the past two decades, becoming one of the most important sectors of the Swiss economy .

What would it mean for Tecentriq if Trump's tariff hammer fell? A tariff of, say, 25 percent would be levied on the so-called customs value. This is usually the value of the finished product upon import into the US.

This customs value includes all the value added up to this point . This includes not only the contributions in Switzerland, but also the work in the foreign factories. The customs value also includes the inputs of the US researchers whose patent made Tecentriq production possible in the first place.

Trump's tariffs thus act like a tax on the entire value chain. Part of this impacts Switzerland. Local value creation could suffer if American demand for medicines declines or production is relocated to the US. But factories in other European countries are also affected. Last but not least, the tariffs also indirectly affect pharmaceutical researchers in the US – Trump's fellow countrymen.

That's the paradox of Trump's tariffs: They stem from the notion that a product is produced in one country and exported to another. This is indeed the case with Swiss cheese.

But large parts of today's economy are more complex than cheese production. The cancer drug Tecentriq is a prime example: It is the product of a highly specialized value chain that stretches from the US through Switzerland and Europe, and back to the US.