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Johnson & Johnson executives are bracing for impact from tariffs imposed by President Donald Trump’s administration.
During an April 15 earnings call, executives said the company expects about $400 million in costs this year from tariffs already in place against China and products including aluminum and steel. CEO Joaquin Duato warned that “tariffs can create disruptions in the supply chain, leading to shortages.”
“If what you want is to build manufacturing capacity in the US, both in medtech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy,” Duato said.
Looming threat. The company may face further losses if the Trump administration imposes pharmaceutical tariffs, a move that is widely expected following an investigation into the national security implications of pharmaceutical imports, which the Department of Commerce announced on April 14.
Pharmaceuticals have so far been exempt from tariffs, but the Trump administration has said it’s considering imposing them to bring more pharma manufacturing to the US.
Joseph Wolk, J&J’s EVP and CFO, said the company is “very limited” in what it could do to mitigate the tariffs’ effects given it can’t raise prices on supplies or drugs since the company already has contractual agreements in place with set prices.
And Duato isn’t the only pharmaceutical exec to publicly denounce tariffs. Michel Demaré, AstraZeneca’s chair, said on April 11 during the company’s annual general meeting that “medicines should be exempted from any kind of tariffs because at the end this is just harming patients, health systems, and restricting health equity,” Bloomberg reported.
Still standing strong. Despite the hit from tariffs, J&J’s earnings still beat analyst expectations, according to Reuters, with sales up 2.4% from $21.4 billion in the same quarter last year to $21.9 billion in Q1 2025.
The company also raised its 2025 sales guidance to $91.6 billion–$92.4 billion, up from the $90.9 billion–$91.7 billion announced in January.
The bump was largely thanks to Caplyta, a bipolar and schizophrenia drug J&J acquired when it bought biopharmaceutical company Intra-Cellular Therapies in January for roughly $14.6 billion. Wolk said during the earnings call that the company expects to make $700 million this year from Caplyta sales.
David Risinger, senior managing director and senior research analyst at Leerink Partners, wrote in two separate notes following the earnings call that J&J’s results were a “welcome relief,” and that executives largely downplaying the risks posed by tariffs is an “important positive development for perception about the threat to J&J and the branded biopharma industry at large.”
Bringing it home. Even without pharmaceutical tariffs in place, major drugmakers are already announcing plans to move manufacturing to the US.
J&J said in March it would invest $55 billion into US-based manufacturing, research and development, and technology, a 25% increase in US investments over the next four years. Part of that includes building a 500,000-square-foot biologics manufacturing facility in North Carolina, which the company said will create 5,000 construction jobs and 500 positions within the facility.
“At the completion of this investment plan, essentially all our advanced medicines that are used in the US will be manufactured in the US,” Duato said during the earnings call.
And Eli Lilly executives announced at a Feb. 26 press conference in Washington, DC, that the company would invest at least $27 billion to open four new plants in the US in the next five years, saying the money brings Lilly’s total US-based investments to $50 billion since 2020. The four new sites would bring in 13,000 new jobs, the executives added.
Correction 04/18/25: This article has been updated to reflect that J&J anticipates $400 million in tariff-related costs.