Despite looming tariff concerns affecting the pharmaceutical industry, Johnson & Johnson maintained its earnings forecast on Tuesday while raising its sales projections. The healthcare giant expects to absorb approximately $400 million in tariff-related costs throughout 2025.
During a CNBC interview, J&J’s Chief Financial Officer Joe Wolk revealed that the company’s adjusted earnings per share forecast remains at $10.60 for 2025, unchanged from January’s projection. This announcement comes in the wake of President Donald Trump’s new broad-reaching tariff policies on imported medical devices and potential future duties on pharmaceuticals.
The Commerce Department initiated an investigation Monday examining national security implications of pharmaceutical imports, a move analysts believe will likely result in additional tariffs. Wolk clarified that the majority of the anticipated $400 million tariff impact pertains to J&J’s medical device division and includes retaliatory tariffs imposed by China on American goods.
Industry analysts view J&J’s steady outlook positively. Leerink Partners analyst David Risinger noted that the company’s downplaying of tariff risks represents an encouraging development for both J&J and the broader branded biopharmaceutical sector.
The company recently announced plans to invest $55 billion over four years to construct new drug manufacturing facilities in the United States. This initiative aligns with Trump’s push for pharmaceutical companies to return manufacturing operations to American soil. Upon completion, J&J expects to produce “essentially all” of its advanced medications within the U.S.
During a company conference call, CEO Joaquin Duato emphasized that tax policy, rather than tariffs, more effectively encourages capital investment. He warned that tariffs could disrupt supply chains and lead to shortages, suggesting that tax policy provides a more practical approach to expanding U.S. manufacturing capacity.
The scope of potential pharmaceutical tariffs remains uncertain following the Commerce Department’s new investigation. The probe will examine both branded and generic medicines, along with active pharmaceutical ingredients and their source materials. Trump has suggested potential duties ranging from 50% to 200%, which would significantly impact an industry with global supply chains spanning Europe and Asia.
J&J’s first-quarter performance exceeded Wall Street expectations, with total sales reaching $21.9 billion, representing a 2.4% increase from the previous year. The pharmaceutical division generated approximately $13.9 billion in revenue, surpassing analyst forecasts.
Company executives expressed optimism about several medicines in their portfolio, particularly highlighting their cancer drug combination Rybrevant and Lazcluze. J&J projects these treatments will generate sales approximately double the current Wall Street estimate of $1.8 billion by 2027.
Wolk suggested that the administration might concentrate its tariff focus on generic medicines and precursor chemicals, though he emphasized this was merely the company’s interpretation of potential national security concerns. Duato stressed the importance of healthcare companies collaborating with the administration to address supply chain vulnerabilities.
The pharmaceutical industry, which benefited significantly from Trump’s 2017 tax legislation, continues to advocate for its renewal. Most pharmaceutical companies currently source their precursor chemicals and active ingredients from China and India, while maintaining production facilities in countries such as Ireland, Switzerland, the Netherlands, and Singapore.
Despite the positive earnings report and maintained forecast, J&J’s shares experienced a slight decline of 0.5% during mid-morning trading on Tuesday.
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