By Patrick Wingrove and Bhanvi Satija
(Reuters) -Johnson & Johnson Chief Executive Joaquin Duato said on Tuesday that tariffs on pharmaceuticals can create supply chain disruptions and that favorable tax policies would be a more effective tool to boost U.S. manufacturing capacity of both drugs and medical devices. Duato, during an investor call to discuss first-quarter results, said that healthcare companies should work with the Trump administration to mitigate supply chain vulnerabilities and prevent any drug shortages that can result from tariffs. J&J is the first major healthcare company to report results since the administration of U.S. President Donald Trump proposed hefty duties on trade partners including China, a key source of raw ingredients and supplies for the pharmaceutical and medical device industries.
Other drugmakers have made similar pleas about tax policy to the Trump administration, including Eli Lilly, which pledged to invest $27 billion in new U.S. plants over the next five years.
Last month, J&J also laid out plans to raise U.S. investments by 25% to more than $55 billion over the next four years, including some already planned commitments.
J&J reported first-quarter revenue and profit above Wall Street estimates on Tuesday, driven by strong cancer drug sales, and provided its first forecast that accounts for trade tariffs imposed by Trump.
The New Jersey-based healthcare conglomerate raised its 2025 sales forecast by $700 million to reflect the addition of schizophrenia drug Caplyta to its portfolio, which it expects to be approved this year.
The company also said it expects Spravato, a nasal spray used to treat depression, to bring in $3 billion to $3.5 billion in annual sales by 2028.
Even with the expected boost from Caplyta, J&J maintained its profit estimate to reflect the impact of tariffs and dilution from its $14.6 billion deal to buy neurological drugmaker Intra-Cellular.
Chief Financial Officer Joe Wolk in an interview said the profit outlook takes into account about $400 million expected to be incurred due to tariffs, mostly in the company’s medical device business, from the second quarter.
He said the estimate reflects the impact of tariffs currently in place, even if some parts of those have been given a 90-day pause by the Trump administration.
The finance chief added on the investor call that tariffs on China and China’s retaliatory tariffs would be the most substantial contributors to his estimate, but that duties on Mexico, Canada and on steel and aluminum would have an impact.
