Johnson & Johnson Innovative Medicine (J&J) addressed the potential impact of pharmaceutical tariffs during its Q1 2025 earnings call, as the US government intensifies its scrutiny of foreign drug supply chains. The company’s chief financial officer Joseph Wolk said the company expects a $400m cost tied to newly proposed and existing tariffs, with the largest burden stemming from China’s retaliatory duties on US-origin goods.
With the possibility of pharma-specific tariffs looming and the Department of Commerce announcing the launch of a Section 232 investigation into pharmaceutical imports on 14 April, investors were watching closely for commentary from J&J on US trade policy. The investigation gives President Donald Trump 90 days to determine whether tariffs should be imposed on national security grounds.
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CEO Joaquin Duato said the company is analysing the Section 232 process, noting it had been anticipated and would be treated as a normal regulatory development. “It’s important that companies in healthcare partner with the administration to look to mitigate some of the vulnerabilities that exist today in our healthcare supply chain,” Duato said.
“We plan to do it in this process to make sure that we have enough manufacturing capacity here in the US to be able to address multiple scenarios. We want to be deferential to the administration and their process,” he added.
Many large pharma companies like MSD and Novartis have announced plans to increase manufacturing activity in the US against the backdrop of these tariff announcements, and J&J announced its own $55m US investment in March 2025.
“Since President Trump’s 2017 tax reform, the investment in manufacturing – both in medtech and in pharmaceuticals – has significantly increased. When you think about our recent announcement of investing $55bn over the next four years at the completion of this investment plan, essentially all our advanced medicines that are used in the US will be manufactured in the US,” said Duato.
J&J indicated that most of the projected $400m tariff impact will affect its Medtech division. The total includes duties from China, as well as import tariffs from Mexico and Canada not excluded under the United States–Mexico–Canada Agreement (USMCA). Wolk noted that mitigation strategies are limited due to existing price controls and contractual agreements, particularly in the pharmaceutical segment. Tariff-related costs will primarily be recorded as inventory before impacting future profit and loss statements.
Q1 2025 financial results
Despite the headwinds, J&J posted Q1 results above analyst expectations. Revenue for the quarter rose by 2.4% to $21.9bn, with operational growth of 4.2% and adjusted operational growth of 3.3%. Oncology products, including multiple myeloma drug Darzalex (daratumumab), remained key contributors.
The company raised its 2025 sales forecast by $700m to $92bn at the midpoint, reflecting the addition of Caplyta (lumateperone) following its $14.6bn acquisition of Intra-Cellular Therapies. However, J&J lowered its adjusted operational EPS growth projection to 6.2%, down from 8.7%, citing dilution from the acquisition. Adjusted reported EPS growth remains unchanged at 6.2%, consistent with guidance first issued in January 2025.
J&J also reported regulatory approvals for two key therapies in 1Q: the US Food and Drug Administration (FDA) cleared Tremfya (guselkumab) for Crohn’s disease, and the European Commission (EC) approved Rybrevant (amivantamab-vmjw) for specific lung cancer indications.
Medtech operational sales rose 4.1%, with growth driven by cardiovascular and general surgery segments. Orthopaedics showed weakness, particularly in spine and sports medicine.
Legal challenges remain ongoing. In April 2025, a Texas court blocked J&J’s attempt to resolve talc-related liabilities via a bankruptcy filing by its subsidiary Red River Talc. J&J previously expressed its intention to defend itself against the claims, which it insists are “meritless” and “premised on junk science”. J&J intends to recover up to $7bn from legal reserves.
