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Merck & Company Inc.

Pharmaceutical Companies Face Tariff Costs and Uncertainty Under Trump Administration

Strategic Insights

— 1 min read

The US pharmaceutical company Merck has disclosed that it expects to pay an additional $200m in costs this year due to tariffs imposed by the Trump administration and retaliatory tariffs from foreign governments. The company cited a 10% tax on imports from around the world, as well as tariffs related to China. This projection does not account for potential "major" tariffs that could be imposed specifically on pharmaceutical imports. Meanwhile, Swiss company Roche has petitioned Washington for exemption from tariffs, highlighting its significant investment in the US and its efforts to move production of certain medicines to the country.

Key Takeaways:

  • Merck expects to pay an extra $200m in costs this year due to tariffs imposed by the Trump administration and foreign governments, including those related to China.
  • Roche has petitioned Washington for exemption from tariffs, citing its significant investment in the US and efforts to move production of certain medicines to the country.
  • The Trump administration's threatened "major" tariffs on pharmaceutical imports could further increase costs for companies like Merck.
  • Merck's projected costs do not account for potential retaliatory tariffs from China, which could be a major concern for the company.
  • Roche's CEO, Thomas Schinecker, emphasized the complexity of pharmaceutical production and the challenges of implementing tariffs in the industry.
  • Four of Roche's medicines account for 92% of its "potential tariff exposure," with three of those medications already being produced in the US.
  • Roche has begun the process of setting up US production sites for its medications, a process that requires significant investment and regulatory approval.

Statistics:

  • Merck expects to pay an additional $200m in costs this year due to tariffs.
  • The Trump administration has imposed a 10% tax on imports from around the world.
  • Foreign governments, including those related to China, have imposed retaliatory tariffs on the US.
  • Roche has invested $50bn in the US and plans to move production of certain medicines to the country.
  • Four of Roche's medicines account for 92% of its "potential tariff exposure."
  • Roche's sales rose by 7% in the first quarter, driven by several key products.

Sources:

  • "Merck's Q1 results" by A.M. Best (no date)
  • "Roche H1 2022 Results" by Roche Holdings (no date)
  • "Roche confirms full-year financial guidance" by Capital Journal (no date)
  • Photograph: Seth Wenig/AP (no date)
  • Reuters: "US president says to 'help American businesses become great again'" (no date)
  • World Trade Organization: "Pharmaceuticals" (1995)

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