For pharmaceutical companies importing patented drugs and pharmaceutical ingredients into the United States, the Section 232 tariff changes taking effect in 2026 introduce a financial question that extends beyond the customs declaration.
The more important question for finance teams may be:
When does the additional import cost actually reach inventory, COGS, and gross margin?
For life sciences companies, the answer depends on how tariff-related costs move through purchasing, inventory, manufacturing, and financial reporting. That makes landed cost an ERP consideration, not simply a customs or procurement issue.
The Financial Impact Starts in Inventory
Import duties can become part of the cost of inventory rather than immediately becoming a period expense.
That distinction matters for pharmaceutical companies carrying significant quantities of APIs, ingredients, components, or finished products.
Consider a company that receives several months of API inventory in October. The additional import cost may become part of the inventory cost associated with those materials. As those materials move into production and eventually into finished goods, the cost continues through the inventory lifecycle.
COGS is recognized when the associated inventory is sold.
This creates a timing difference between when the company pays the duty and when the financial impact reaches the income statement.
A company could therefore experience a significant change in procurement cost without seeing the full effect in gross margin during the same quarter.
For finance teams, that makes inventory visibility an important part of tariff planning.
Forecast COGS From Inventory, Not Just Supplier Pricing
A forecast based solely on current supplier pricing may not capture the timing of tariff-related cost changes.
Finance teams should be able to identify:
- Which inventory was purchased before the tariff change
- Which inventory carries the new landed cost
- How much affected inventory is currently on hand
- When those inventory layers are expected to be consumed
- When the associated cost is expected to reach COGS
- How the change could affect product and company-level gross margin
This is where ERP data becomes particularly valuable.
Instead of treating tariff exposure as a separate spreadsheet exercise, companies can connect purchasing, inventory, manufacturing, and financial information to create a more complete view of the expected impact.
For companies looking to strengthen this broader connection between finance and operations, Archer's NetSuite services provide the foundation for bringing these processes together.
Tariff Exposure Requires More Than an Item Number
Pharmaceutical supply chains can contain multiple sourcing relationships, products, and manufacturing paths.
The Section 232 framework includes specific treatment for covered patented pharmaceutical products and associated ingredients, along with different provisions based on country of origin and qualifying agreements or plans.
That creates a data-management question for the ERP.
Finance and operations teams may need visibility into information such as:
- Item
- Supplier
- Country of origin
- HTSUS classification
- Applicable tariff treatment
- Related finished product
- Inventory quantity
- Inventory value
- Expected consumption date
Maintaining this information in a structured environment makes it easier to evaluate changes when sourcing, products, agreements, or tariff requirements change.
For life sciences organizations, this also reinforces the importance of lot-level inventory visibility and traceability across the supply chain.
What NetSuite Can Do With Landed Cost
NetSuite's landed cost functionality can incorporate additional costs associated with acquiring inventory, including freight, duty, insurance, and other applicable costs.
Those costs can increase the value of inventory and ultimately affect profitability when the inventory is sold.
For a pharmaceutical company facing increased import costs, this creates an opportunity to make tariff-related costs more visible within the ERP.
Rather than treating duty as an isolated accounting adjustment, finance and operations teams can establish a dedicated landed-cost structure that helps distinguish tariff costs from other procurement expenses.
That distinction becomes useful when analyzing:
Product profitability: Which products are carrying the greatest additional import cost?
Supplier exposure: Which suppliers or sourcing locations have the greatest landed-cost impact?
Margin: How are changes in inventory cost affecting gross margin over time?
Pricing: Which products may require a pricing review?
Sourcing: How would an alternative supplier or manufacturing location affect total cost?
Forecasting: When will the additional inventory cost begin flowing through COGS?
These questions become much easier to address when the underlying information is captured consistently in NetSuite.
Estimated Landed Cost Can Support Planning
Companies that need to plan around expected landed costs can also use NetSuite's Estimated Landed Cost functionality to incorporate anticipated costs into purchasing and receiving processes.
For life sciences companies managing significant imported inventory, this can provide another way to incorporate expected costs into the purchasing process.
The objective is not simply to record the tariff.
It is to create a more complete picture of what inventory actually costs to bring into the business.
That visibility can support better conversations between procurement, operations, and finance.
Standard Cost Requires a Clear Policy
Companies using standard costing may also need to consider how changes in landed cost interact with their existing costing model.
When actual purchase costs differ from standard costs, differences can flow through purchase price variance.
Finance teams therefore need to determine how tariff-related cost changes should be handled within their existing costing methodology.
Should tariff-related costs be incorporated into standard costs?
Should they remain visible through purchase price or other variances?
How frequently should standards be reviewed?
Which products have enough tariff exposure to warrant a different approach?
There is no universal answer. The important part is establishing a consistent methodology that finance can explain, forecast, and apply during the close.
Tariffs Create a Planning Question, Too
The ERP should not only tell finance what happened. It should help the team understand what could happen next.
For example, a life sciences company could model several scenarios:
Current sourcing: What happens to landed cost and gross margin if current suppliers remain unchanged?
Alternative sourcing: How would a different supplier or country of origin affect total cost?
Onshoring: How would moving production closer to the U.S. market affect landed cost, inventory, and capital requirements?
Pricing: What level of price adjustment would be required to maintain a target gross margin?
These questions connect ERP data with financial planning.
For companies using NetSuite Planning and Budgeting, tariff assumptions can also become part of broader scenario planning around margins, cash requirements, sourcing, and inventory.
What Finance Should Be Able to See
For a life sciences company exposed to changing import costs, the ERP should ultimately help answer four questions:
What are we exposed to?
Identify affected products, materials, suppliers, and sourcing locations.
What is sitting in inventory today?
Understand which inventory carries different cost structures.
When will the impact reach COGS?
Connect inventory levels and consumption patterns to the expected timing of margin impact.
What can we do about it?
Evaluate pricing, sourcing, inventory, manufacturing, and planning scenarios.
That is where the conversation moves beyond tariffs.
It becomes an ERP and financial planning question.
Landed Cost Is a Visibility Issue for Life Sciences Finance
Tariffs are paid at the border, but their financial impact can continue through the inventory lifecycle long after the shipment arrives.
For pharmaceutical and life sciences companies, understanding that lifecycle can be just as important as understanding the tariff rate itself.
NetSuite can provide the foundation for connecting landed cost, inventory, purchasing, manufacturing, and financial reporting. The value comes from configuring those processes so finance can see not only what inventory costs today, but how those costs are expected to affect margins in the quarters ahead.
For CFOs and Controllers, that visibility can turn a tariff change from a reactive accounting exercise into a more informed planning conversation.