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 mentioned they count on $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 every week after J&J executives mentioned they count on $400 million in tariff-induced bills in 2025.
Robert Davis, Merck’s chairman and CEO, mentioned through the earnings name that the impression will primarily come from current tariffs carried out “between the US and China, and to a lesser degree, Canada and Mexico.”
Though the risk 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 significantly apprehensive.
“With respect to potential additional tariffs by the US specifically on pharmaceuticals, our global supply chain and current inventory levels put us in a good position to navigate potential near-term impacts,” he mentioned.
When requested through the earnings name how Merck is getting ready for potential pharmaceutical tariffs, Davis mentioned the corporate has recognized methods to “reposition” its manufacturing, together with altering the priorities of current crops, bringing on exterior manufacturing, and constructing inside manufacturing.
Merck has invested $12 billion in US-based manufacturing since 2018 and plans to speculate an extra $9 billion via 2028, Davis mentioned, including that the corporate’s investments “are leading to more of our products for US patients being manufactured in the US as well as more opportunities for export.”
Zoom out. Merck isn’t the one drugmaker highlighting US investments.
J&J executives in March mentioned the corporate plans to speculate $55 billion in US manufacturing over the subsequent 4 years. And in February, Eli Lilly executives mentioned the corporate will make investments at the least $27 billion to open 4 new US-based crops over the subsequent 5 years.
All three drugmakers have mentioned their selections to increase US manufacturing have been as a result of 2018 Tax Reduce and Jobs Act, which lowered the home tax fee for pharmaceutical corporations.
Tax coverage, moderately than tariffs, is a “very effective tool to be able to build manufacturing capacity here in the US, both for medtech and pharmaceuticals,” J&J CEO Joaquin Duato mentioned through the firm’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 corporate mentioned it nonetheless expects worldwide gross sales to fall between $64.1 billion to $65.6 billion this 12 months.
Merck can also be getting 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% through 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 observe following Merck’s earnings name that this was simply barely under Leerink Companions’s expectations.
This report was initially revealed by Healthcare Brew.
This story was initially featured on Fortune.com
