Beneath the undulating and unpredictable waves of a turbulent economy and new tariff realities, a sort of calm has settled over the pharmaceutical industry. The message from CEOs? Don’t worry — we’ve got this.
The world’s largest drugmakers aren’t quite out of the woods, of course, but as they reported earnings for the first quarter, they looked back on a period of U.S. executive orders and shifting trade policies as chaotic, but manageable.
A common thread among pharma leaders was that they don’t want to overreact to an uncertain future by avoiding a rogue wave and steering into a cliff face. But each company also entered 2025 with its own set of priorities and challenges, shaping R&D and commercial enterprises despite the shifting winds above.
Here’s what Big Pharma CEOs have said in recent weeks about where they stand in the face of macroeconomic trends and how they hope to mitigate those effects as they come.
“If what you want is to build manufacturing capacity in the US … the most effective answer is not tariffs but tax policy.”
Joaquin Duato
CEO, J&J
As J&J’s C-suite stares down the barrel of a $400 million tariff hit, CEO Joaquin Duato waxed nostalgic for President Donald Trump’s first term in the Oval Office. Particularly impactful for J&J were the corporate tax cuts established in 2017.
Duato noted during the call that the tax reform “significantly increased” investment in manufacturing. He pointed to the company’s March announcement that it would invest $55 billion in U.S. manufacturing over the next four years, with an estimated economic impact of more than $100 billion per year.
Cross-border levies, on the other hand, present the opposite problem. He said that “tariffs can create disruptions in the supply chain, leading to shortages.”
But the company isn’t resorting to drastic measures as uncertainty permeates the conversation. J&J CFO Joseph Wolk said “these tariffs are very fluid, and the responsible action for us now is to quantify what we see as the impact in 2025, and then see what happens” later in the year.
“What's more challenging is trying to pass the tariff impacts to our customers … I don't see that as a viable source for mitigation.”
Rob Michael
CEO, AbbVie
Automakers facing tariff-related costs can raise prices to make up the difference. For pharma companies, pulling that lever is more challenging due to the guardrails that control drug pricing in the U.S. The situation has led drugmakers like AbbVie to take other actions for mitigating extra costs instead.
CEO Rob Michael said on an earnings call that the drugmaker will look to inventory management and alternate ingredient sourcing in the near term and upping U.S. manufacturing for more long-term impact. AbbVie plans to invest $10 billion over the next 10 years to bring more U.S. sites online, Michael said on the call.
Already, AbbVie has some of these protections in place. The company’s Humira followup Skyrizi posted sales of almost $12 billion in 2024, and Michael said all of the company’s U.S. Skyrizi product is made domestically.
“We are in exchange with the U.S. government … we are on the case.”
Thomas Schinecker
CEO, Roche
Roche CEO Thomas Schinecker projected confidence that the Swiss drugmaker is in a good position to parry most effects of increased tariffs. Although he couldn’t disclose details of official conversations, Schinecker said the company has been engaging with both the U.S. and EU governments to stay on top of the issue.
“[We] are making sure that we can absorb potential tariffs throughout the year,” Schinecker said, noting that, like AbbVie, the company has kept inventory management as a priority to avoid many of those potential impacts.
“We don’t place a lot of emphasis on it.”
Vas Narasimhan
CEO, Novartis
While many pharma giants shied away from including tariff impacts in official full-year financial guidance, CEO Vas Narasimhan said Novartis has modeled them in and that any tariff effects would be “manageable and not something that we need to highlight with respect to our financial outlook.”
While Novartis plans to invest $23 billion to secure 100% end-to-end U.S. manufacturing, the Swiss company is also emphasizing growth in the European biopharma industry, where he said that “clearly prices … have continued to decline, no longer reflecting the innovation that we deliver.” Between market growth caps, tough regulations and low launch prices, Europe has fallen behind, Narasimhan said, and he is working with others in the industry to “address the situation.”
“What can you do with 7% of your healthcare costs allocated to innovating medicines? Of course, not much.”
Pascal Soriot
CEO, AstraZeneca
AstraZeneca CEO Pascal Soriot is also witness to pricing disparity between the U.S. and Europe, including the U.K., where he said only 7% of the health care budget has been allocated to innovative medicines. Trump’s pharma-related executive order addresses drug prices in the U.S., and Soriot sees an opportunity for other parts of the world to start leveling the playing field.
“The investment in innovation in pharmaceuticals in Europe has to go up,” Soriot said, which would raise prices closer to those in the U.S. but allow for better access to those drugs, as well. He wants to see wealthier countries in Europe contributing more to innovation, reallocating GDP “just like they have to contribute more to their own defense.”
“In many ways, we are aligned with what the administration is wanting to do and feel that we are in a position to be able to do that quite effectively.”
Rob Davis
CEO, Merck & Co.
Merck has been rebalancing its supply chain since U.S. tax reforms took hold in 2017, said CEO Rob Davis, and that process has put the company in a better position to deal with tariffs by keeping each region more separate and discrete from one another. The drugmaker has spent $12 billion to “have U.S. for U.S., Europe for Europe and Asia for Asia,” Davis said on the earnings call, with plans to spend $9 billion more.
“I think we’re in good shape,” Davis said of the short term, although he acknowledged a tariff effect of about $200 million due to levies mostly between the U.S. and China. Still, as the company continues to rearrange its supply chain, those effects are likely to fade away, he said.
“There is risk going forward, but it's a very, very different ballgame.”
Albert Bourla
CEO, Pfizer
Pfizer CEO Albert Bourla said he is “cautiously optimistic” that the pharma giant can weather the tariff storm by appealing to the Trump administration’s desire to keep the pharmaceutical wheels turning in the U.S. Citing “very productive discussions” with White House officials, he said investigations into the effects tariffs will have on drugmakers will likely show that any sector-specific levies would be bad for business and national security.
