The opening salvo of second-quarter earnings calls this week came against President Donald Trump’s renewed calls for a tariff on pharmaceuticals.
The long-threatened tariffs will arrive “probably at the end of the month,” the president suggested Tuesday. “We’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff,” Trump added.
While executives at both Johnson & Johnson and Novartis had a good financial story to tell this week, analysts and journalists were understandably eager to get the companies’ take on the tariff threat.
On an earnings call with analysts Wednesday, J&J’s CEO Joaquin Duato was keen to deflect the conversation away from tariff uncertainty and toward praise for Trump’s “big, beautiful bill.”
“It's hard to know what is going to happen ultimately with tariffs, but what we do know for sure is that the tax policies that just passed are already creating American jobs and driving innovation,” Duato said.
“These very policies that just passed are the ones that have enabled our commitment to invest $55 billion in the U.S. in the next four years, and our goal is to be able to manufacture in the U.S. all the medicines that are consumed in the U.S. at the completion of that plan, and we are on our way of being able to do that,” he added.
When it came to the broader impact of sweeping tariffs on imports from other countries plus the retaliatory tariffs some of those countries have imposed on the U.S. in turn, J&J also had a positive take.
The New Jersey drug giant now estimates that the impact across 2025 will be around $200 million—half the $400 million suggested earlier in the year—with only its MedTech business affected.
“We will look to reinvest the differential to continue to accelerate our pipeline and further power the launch of our new products—those on the market with new indications and those with near-term anticipated approvals,” J&J Chief Financial Officer Joseph Wolk told analysts on the same call.
“We continue to monitor what the future years’ impact could be of tariffs on our business,” Wolk added.
A 'significant' hit
When Novartis unveiled its own second-quarter earnings results the following day, CEO Vas Narasimhan, M.D., gave a deeper insight into how the company would handle the “significant” hit from the pharmaceutical tariffs proposed this week.
“I think [it] would clearly have an impact that I think we'd have to see on a product-by-product and situation [basis],” Narasimhan told journalists on an earnings call Thursday.
The CEO suggested the 12-18 month tariff implementation timeline referenced by Trump might not be long enough for Novartis to transfer all necessary medicine production to the U.S.
“Typically for most medicines, it's a three- to four-year horizon to move full production from one location to another,” he explained on the call. “We're working very hard to accelerate that as fast as we can, and it's our intention to keep the administration fully updated on all of our investments, the progress we're making, and hopefully demonstrate that we are making the investments that we committed to moving production over, and that could mitigate any potential tariffs.”
“But again, this will all depend on the details,” Narasimhan added.
The Swiss pharma has “adequate inventory” in the U.S. for the rest of the year, according to the CEO, who expressed hope that Novartis won’t face a worst-case scenario.
“In terms of the specifics of the next few years, we'd have to see how the actual tariffs are structured,” he said. “We're hopeful that the administration gives consideration to companies like us who are making the investment to move our production into the U.S., and that would enable us to mitigate any of the impacts that may come.”
“But we'll have to, of course, have those discussions and see how the tariffs are in fact rolled out,” he added.