Despite growing concerns over tariffs in the pharmaceutical industry, Johnson & Johnson maintained its financial outlook for 2025 while raising sales projections during its first-quarter earnings report on Tuesday.
The healthcare giant anticipates absorbing approximately $400 million in tariff-related costs this year, primarily affecting its medical device division and reflecting retaliatory duties from China. However, J&J is keeping its adjusted earnings per share forecast at $10.60 for 2025, unchanged from January’s estimate before President Donald Trump announced broad new import taxes.
The pharmaceutical sector faces additional uncertainty after the Trump administration initiated an investigation Monday into potential national security implications of drug imports, which analysts believe could lead to new tariffs. The administration has previously suggested duties ranging from 50% to 200% on pharmaceutical imports.
During a CNBC interview Tuesday morning, J&J Chief Financial Officer Joe Wolk characterized the company’s performance as “a pretty healthy beat” given the new tariff challenges that weren’t factored into January’s guidance. Wolk declined to provide long-term tariff impact estimates, citing the rapidly evolving nature of trade policies.
The company’s stability amid industry turbulence was viewed positively by market observers. Leerink Partners analyst David Risinger noted that J&J’s downplaying of tariff risks represented an encouraging development for both the company and the broader pharmaceutical sector.
J&J recently announced plans to invest $55 billion in U.S. drug manufacturing facilities over four years, joining other pharmaceutical companies in efforts to relocate production domestically. Once completed, these facilities are expected to produce nearly all of J&J’s advanced medications within the United States.
CEO Joaquin Duato emphasized that tax policy, rather than tariffs, more effectively encourages capital investment. During the earnings call, he warned that tariffs could disrupt supply chains and cause shortages, advocating instead for tax incentives to boost domestic manufacturing capacity.
The Department of Commerce’s investigation encompasses both branded and generic medicines, along with active ingredients and raw materials. This broad scope could significantly impact the industry, which currently relies heavily on global supply chains spanning Europe and Asia, with many key ingredients sourced from China and India.
J&J reported first-quarter sales of $21.9 billion, representing a 2.4% increase year-over-year and exceeding Wall Street expectations. The pharmaceutical division performed particularly well, generating revenue of $13.9 billion.
Company executives highlighted several promising medicines in their portfolio and suggested analyst forecasts were too conservative for certain experimental therapies. Notably, they projected that sales of their cancer drug combination Rybrevant and Lazcluze would reach approximately double current Wall Street estimates of $1.8 billion by 2027.
The pharmaceutical industry, which benefited substantially from 2017 tax legislation during Trump’s first term, is advocating for its renewal. Duato emphasized the importance of industry collaboration with the administration to address healthcare supply chain
vulnerabilities.
Wolk suggested that upcoming pharmaceutical tariffs might focus primarily on generic medicines and precursor chemicals, though he emphasized this was merely the company’s interpretation of potential national security concerns.
Despite the positive earnings report and maintained guidance, J&J’s shares declined slightly, trading down 0.5% by mid-morning Tuesday.
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