Merck is following Johnson & Johnson’s lead and reporting an anticipated monetary hit from tariffs imposed by the Trump administration.
In an April 24 earnings name, executives stated they anticipate $200 million in tariff-related prices in 2025. Merck lowered its full-year revenue expectations from $8.88–$9.03 per share to $8.82–$8.97 per share.
The information comes per week after J&J executives stated they anticipate $400 million in tariff-induced bills in 2025.
Robert Davis, Merck’s chairman and CEO, stated throughout the earnings name that the impression will primarily come from current tariffs applied “between the US and China, and to a lesser diploma, Canada and Mexico.”
Though the menace of pharmaceutical tariffs looms following the Division of Commerce’s announcement on April 14 that the Trump administration is investigating the nationwide safety implications of pharmaceutical imports, Davis didn’t appear notably apprehensive.
“With respect to potential extra tariffs by the US particularly on prescription drugs, our world provide chain and present stock ranges put us in a superb place to navigate potential near-term impacts,” he stated.
When requested throughout the earnings name how Merck is making ready for potential pharmaceutical tariffs, Davis stated the company has recognized methods to “reposition” its manufacturing, together with altering the priorities of current vegetation, bringing on exterior manufacturing, and constructing inner manufacturing.
Merck has invested $12 billion in US-based manufacturing since 2018 and plans to make investments a further $9 billion by way of 2028, Davis stated, including that the company’s investments “are main to extra of our merchandise for US sufferers being manufactured in the US in addition to extra alternatives for export.”
Zoom out. Merck isn’t the solely drugmaker highlighting US investments.
J&J executives in March stated the company plans to make investments $55 billion in US manufacturing over the subsequent 4 years. And in February, Eli Lilly executives stated the company will make investments at the very least $27 billion to open 4 new US-based vegetation over the subsequent 5 years.
All three drugmakers have stated their selections to develop US manufacturing have been due to the 2018 Tax Lower and Jobs Act, which lowered the home tax price for pharmaceutical firms.
Tax coverage, slightly than tariffs, is a “very efficient device to have the ability to construct manufacturing capability right here in the US, each for medtech and prescription drugs,” J&J CEO Joaquin Duato stated throughout the company’s earnings name.
A fast rundown. Merck’s worldwide gross sales for Q1 2025 have been $15.5 billion, down 2% from Q1 2024.
Regardless of decreasing 2025 revenue expectations, the company stated it nonetheless expects worldwide gross sales to fall between $64.1 billion to $65.6 billion this 12 months.
Merck can be making ready for its blockbuster most cancers drug Keytruda, which single-handedly accounts for greater than 45% of the drugmaker’s world drug gross sales, to face patent expiration in 2028. Keytruda gross sales rose 4% throughout the quarter to $7.2 billion, up from $6.9 billion in the identical quarter final 12 months, although senior analysis analyst Daina Graybosch wrote in a word following Merck’s earnings name that this was simply barely beneath Leerink Companions’s expectations.
This report was initially revealed by Healthcare Brew.
This story was initially featured on Fortune.com
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