In This Article:
This story was originally published on BioPharma Dive. To receive daily news and insights, subscribe to our free daily BioPharma Dive newsletter.
The threat of tariffs on pharmaceuticals imported to the U.S. hasn’t yet pushed drugmakers off course, with many of the largest companies indicating they expect to be able to absorb any impact in the short term.
Speaking on earnings calls in recent weeks, pharma executives have, for the most part, told investors their supply chains are flexible enough to mitigate the effects of new levies — for this year, at least. With a few exceptions, the large drugmakers that have reported financials for the first quarter are maintaining their sales and profit guidance for 2025.
“We've taken, I think, appropriate actions with inventory levels and in terms of managing our supply chain to enable us to feel comfortable we can manage it this year and in the medium term,” said Novartis CEO Vas Narasimhan in the company’s April 29 earnings call. His comments were largely consistent with those of his counterparts at other drugmakers.
“I’m cautiously optimistic,” said Pfizer CEO Albert Bourla on a separate April 29 call. “I hope that we will weather it successfully.”
Pharma products were exempted from the broad tariffs President Donald Trump announced April 2. But the U.S. Department of Commerce has opened a trade investigation that analysts expect will lead to sector-specific tariffs on national security grounds. Trump has suggested the new tax could be high, floating rates between 50% and 200%. Typically, these so-called Section 232 probes take about nine months, but it’s thought the Trump administration will move more quickly.
Executives acknowledged the uncertainty they still face, but attempted to assure analysts during earnings calls that they’ve prepared for a range of scenarios. Many have already taken steps to insulate themselves, such as by moving inventory to the U.S. or by increasing U.S.-based production of key medicines.
“Companies are aggressively importing as much product as possible ahead of potential tariffs,” wrote David Risinger, an analyst at Leerink Partners, in an April 30 note to clients. If companies have one year or more of supply already in the U.S., he added, they should be able to avoid tariffs impacting their cost of goods and profits in the near term.
A few, namely Johnson & Johnson, Merck & Co. and Pfizer, have also detailed the indirect costs they expect to absorb from the general tariffs already imposed by the U.S., which will raise the expense of procuring goods like steel, laboratory supplies and chemicals. J&J expects a $400 million hit, due mainly to its medical device business, while Merck and Pfizer anticipate, respectively, expenses of $200 million and $150 million.