Despite looming concerns over pharmaceutical tariffs, Johnson & Johnson maintained its financial projections for 2025 while announcing plans to address manufacturing challenges. The healthcare giant revealed during its first-quarter earnings report that it expects to absorb approximately $400 million in tariff-related costs this year, primarily affecting its medical device operations.
The company reaffirmed its adjusted earnings per share forecast of $10.60 for 2025, holding steady to the guidance provided in January before President Trump’s administration announced extensive new tariff policies on medical devices and other imports. This development comes as the pharmaceutical industry faces additional pressure from a recently announced Department of Commerce investigation into pharmaceutical imports’ national security implications.
During a CNBC interview, J&J’s Chief Financial Officer Joe Wolk emphasized the company’s strong performance, noting they achieved impressive results despite incorporating new tariff costs that weren’t factored into January’s projections. The $400 million impact includes both medical device tariffs and retaliatory measures imposed by China on American goods.
The company’s first-quarter performance showed resilience, with total sales reaching $21.9 billion, representing a 2.4% increase compared to the previous year and exceeding Wall Street expectations. The pharmaceutical division performed particularly well, generating revenues of $13.9 billion.
In response to the evolving trade landscape, J&J has committed $55 billion over four years to establish new drug manufacturing facilities within the United States. This investment aligns with the
administration’s push for pharmaceutical companies to relocate production domestically. Upon completion, the company expects to manufacture “essentially all” of its advanced medicines within U.S. borders.
CEO Joaquin Duato emphasized during the earnings call that tax policy, rather than tariffs, represents a more effective approach to stimulating domestic manufacturing investment. He warned that tariffs could potentially disrupt supply chains and lead to product shortages, advocating instead for tax-based incentives to encourage U.S. manufacturing growth.
The scope of potential pharmaceutical tariffs remains uncertain as the Commerce Department begins its investigation. The probe will examine both branded and generic medications, along with active pharmaceutical ingredients and their precursor materials. With Trump suggesting possible duties ranging from 50% to 200%, the industry faces significant cost implications, particularly given its reliance on global supply chains spanning Europe and Asia.
J&J executives expressed their perspective that the administration might focus tariff measures primarily on generic medicines and chemical precursors, though they acknowledged this was speculative. Duato stressed the importance of industry collaboration with the government to address supply chain vulnerabilities.
The company’s outlook also included optimistic projections for specific products, notably forecasting that sales of its cancer treatment combination Rybrevant and Lazcluze would achieve
approximately double the current Wall Street consensus of $1.8 billion by 2027.
Industry analysts, including Leerink Partners’ David Risinger, viewed J&J’s measured response to tariff threats positively, suggesting it could help ease concerns about potential impacts on both J&J and the broader pharmaceutical sector. The company’s ability to maintain its financial guidance while absorbing significant tariff costs has provided some reassurance to an industry grappling with regulatory uncertainty and trade policy challenges.
Despite these encouraging signals, J&J’s stock experienced a modest decline of about 0.5% in mid-morning trading following the
announcement, reflecting ongoing market uncertainty about the broader implications of potential pharmaceutical tariffs and regulatory changes.
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