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 in the course of the earnings name that the influence 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 fearful.
“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 great place to navigate potential near-term impacts,” he stated.
When requested in the course of the earnings name how Merck is making ready for potential pharmaceutical tariffs, Davis stated the corporate has recognized methods to “reposition” its manufacturing, together with altering the priorities of current vegetation, bringing on exterior manufacturing, and constructing inside manufacturing.
Merck has invested $12 billion in US-based manufacturing since 2018 and plans to take a position a further $9 billion by means of 2028, Davis stated, including that the corporate’s investments “are resulting in extra of our merchandise for US sufferers being manufactured within the US in addition to extra alternatives for export.”
Zoom out. Merck isn’t the one drugmaker highlighting US investments.
J&J executives in March stated the corporate plans to take a position $55 billion in US manufacturing over the following 4 years. And in February, Eli Lilly executives stated the corporate will make investments a minimum of $27 billion to open 4 new US-based vegetation over the following 5 years.
All three drugmakers have stated their selections to broaden US manufacturing had been because of the 2018 Tax Minimize and Jobs Act, which lowered the home tax fee for pharmaceutical corporations.
Tax coverage, moderately than tariffs, is a “very efficient instrument to have the ability to construct manufacturing capability right here within the US, each for medtech and prescription drugs,” J&J CEO Joaquin Duato stated in the course of the firm’s earnings name.
A fast rundown. Merck’s worldwide gross sales for Q1 2025 had been $15.5 billion, down 2% from Q1 2024.
Regardless of reducing 2025 revenue expectations, the corporate 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% in the course of 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 printed by Healthcare Brew.
This story was initially featured on Fortune.com
