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The CEO of Johnson & Johnson has issued a warning regarding possible U.S. tariffs on the pharmaceutical industry, suggesting that such measures could result in medicine shortages. While the industry was initially exempt from the broad tariffs announced this month, the Trump administration has indicated the consideration of tariffs to encourage domestic manufacturing.
Currently, there are no U.S. tariffs on pharmaceuticals due to an exemption included in the 1994 World Trade Organization trade agreement. Joaquin Duato, CEO of one of the world’s leading pharmaceutical and medical device corporations, indicated during an analyst call that the absence of tariffs on pharmaceuticals is intentional to prevent supply chain disruptions that could lead to shortages.
Despite this, medical devices and technologies, including the surgical robots produced by Johnson & Johnson, have been impacted by the new U.S. tariffs. Duato remarked that if the goal is to increase manufacturing capacity in the U.S. for both medical technology and pharmaceuticals, effective tax policies, rather than tariffs, would be a better approach.
In March, Johnson & Johnson announced plans to invest $55 billion in new U.S. facilities over the next four years, marking a 25% increase in investment compared to the previous four years. On Monday, it was reported that the U.S. administration had started investigating the national security implications of relying on imported medicines. This investigation began on April 1 and will include a 21-day consultation period.
Duato emphasized the importance of healthcare companies collaborating with the administration to “mitigate some of the vulnerabilities that exist in our healthcare supply chain,” in response to the investigation and potential tariffs. Johnson & Johnson’s chief financial officer, Joe Wolk, stated that the company intends to respect the administration and its processes.
The pharmaceutical industry has generally avoided overtly criticizing the tariffs, preferring to focus on negotiations behind the scenes. However, Duato’s statements follow comments from AstraZeneca’s chairman, Michel Demaré, who warned that tariffs could negatively affect patients, health systems, and limit health equity.
In its Tuesday earnings report, Johnson & Johnson maintained its adjusted diluted earnings per share forecast for the year at $10.50 to $10.70, despite factoring in $400 million in costs primarily associated with tariffs on medical devices. The company reported first-quarter sales of $21.9 billion, a 2.4% increase compared to the same period last year, surpassing analysts’ expectations of $21.6 billion.
