Merck, Bristol Myers Squibb, Sanofi and Roche had little clarity on the potential impact of President Donald Trump’s pharmaceutical tariffs but many companies are already preparing for what’s to come.
Merck has shelled out $200 million for tariff-related expenses so far, and yet, the industry awaits further news on the exact impact that President Donald Trump’s import taxes will have on pharmaceuticals.
Fortunately, Merck was already well into a manufacturing revamp to bring more operations to the U.S. before the tariff threat was made, CEO Robert Davis explained on a first quarter earnings call on Thursday. The effort goes back as far as 2017 with the passing of the Tax Cuts and Jobs Act. Merck has spent about $12 billion since then, the CEO said, with another $9 billion earmarked for the effort.
“As you look at 2025, we’re well positioned with inventory to be able to mitigate anything we could see in the short term,” Davis said of tariffs. He specifically noted that mega blockbuster Keytruda is well stocked to weather a trade war.
As for the medium term, Davis said the company is starting to identify where manufacturing facilities can be repositioned, which could mean changing the priorities of existing plants or bringing on external manufacturing “to bridge gaps.” In the long term, Merck is considering what new facilities it might build.
“Short term, I think we’re in good shape. Medium and long term, we’re taking the steps to position ourselves,” Davis said.
One thing Merck does not intend to do is add tariff costs to the price of its drugs, Davis asserted. “We are not using and do not really see price as a lever for tariffs.”
The New Jersey pharma’s $200 million estimate only takes into account the tariffs that have been levied so far, according to a first-quarter earnings release. The company said the most significant costs have come from tariffs related to China, although the exact levies were not explained. Impacts from tariffs on imports from Canada and Mexico were also factored in, although to a lesser extent, Davis explained. Merck will record the charges in cost of sales, which will negatively impact gross margin.
Merck was not the only company with tariffs top of mind during a busy earnings morning on Thursday. Roche CEO Thomas Schinecker downplayed the risk of tariffs on the Swiss company’s earnings call, saying that just four of its drugs have significant exposure. Of those, three are already produced in the U.S. Roche has stepped up manufacturing of all the medicines, announcing earlier this week that it is injecting $50 billion into its U.S. footprint. Meanwhile, tech transfer for the fourth drug is already underway to have production moved to the U.S. as well, Schinecker noted.
Over at Bristol Myers Squibb, CEO Chris Boerner said it’s too early to tell the full impact of the tariffs. BMS is a U.S. based company already, he noted, adding that the company has taken efforts to reduce supply disruptions ahead of any potential new import taxes and plans to engage with the administration.
Boerner also addressed a recent report that Trump is considering bringing international drug pricing to the U.S. “We have not seen any real impact on our business from actions in Washington,” Boerner said.
Moving on to French pharma Sanofi, executives mostly kept mum on any impacts, despite admitting they “have run through all scenarios.”
“I would really like to help you, but it’s difficult to comment on the occurrence of possible future events that are still unknown or speculative at this stage,” said François-Xavier Roger, Sanofi’s CFO. “But just be aware of the fact that we are ready.”
So far tariff impacts have been within Sanofi’s existing guidance. Pushed further later in Thursday morning’s call, Roger clarified that Sanofi has boosted its U.S. presence in recent years, particularly adding biologic drug substance manufacturing.
“We continue to assess our future capacity requirements and we are considering additional measures potentially including investment in the U.S., aligning our industrial footprint to the needs of our pipeline and to our expected future growth,” Roger said.
