Editor’s (re)View: BMS, Merck, Roche see manufacturing flexibility as key to dealing with tariffs

The threat of tariffs continues to be top of mind for the CEOs of large biopharma companies, who reported this week their financial results for the first quarter of 2025. On their respective calls with analysts, management at Bristol Myers Squibb, Merck, and Roche all went out of the way to reassure investors that they have the manufacturing footprints and flexibility to mitigate potential disruptions from tariffs.

BMS  

Bristol Myers Squibb CEO Chris Boerner emphasized in his call with analysts that they are a drugmaker with a broad global manufacturing network and significant U.S. presence, and that the company is not overly reliant on any single country in terms of its supply chain.

At the same time, Boerner pointed out that global manufacturing networks are “incredibly complex” and that there are long lead times required in terms of making changes to the supply chain, with “inputs coming from all over the world.”

Still, Boerner said BMS has a “tremendous amount of flexibility” in moving its manufacturing around “should any potential tariffs come up,” adding that the company has a cross-functional team in place that’s currently evaluating the company’s mitigation efforts.   

“We have a broad global manufacturing network where we’re looking for opportunities to optimize with tariffs in mind,” Boerner said. “We already have a significant presence in the U.S. and we’re continuing to invest. And we have already undertaken efforts to reduce risks of disruption and shortages as a result of efforts like onshoring.”

William Blair analyst Matt Phipps in a note to investors pointed out that in addition to U.S.-based facilities in Arizona, Massachusetts, Puerto Rico, and Washington, BMS also has manufacturing sites in China, Ireland, Japan, and Switzerland. The company is also building a cell therapy facility in the Netherlands, according to Phipps.

Merck

During Merck’s earnings call, the company said it is expecting approximately $200 million in tariff-related costs in 2025 from existing tariffs involving the U.S., China, Canada, and Mexico. Analysts asked management about the company’s strategies for countering potential pharmaceutical tariffs. CEO Rob Davis said Merck has been “evolving” its supply chain strategy over the last few years to “better balance” the company’s manufacturing footprint, which he emphasized “aligns well” with the Trump administration’s current efforts to reshore manufacturing.

Since 2018, Davis said that Merck has invested $12 billion in U. S. manufacturing operations and that the drugmaker has committed to an additional $9 billion for capital expenditure projects through 2028 — a number he expects to grow going forward.

“Our investments are leading to more of our products for U. S. patients being manufactured in the U. S., as well as more opportunities for export,” according to Davis. Merck’s global supply chain and current inventory levels have put it in a “good position to navigate potential near-term impacts” from tariffs, he said, while noting the company’s ongoing efforts to locate more manufacturing in the U. S. — including for the majority of its upcoming new products— “will help us manage over the medium and long term.”

In the medium to long term, Davis said that Merck has started to identify where the company can reposition its own manufacturing — such as changing the priorities of existing plants — and bringing on external production capabilities “in some cases to bridge gaps” as well as building internal manufacturing infrastructure.

Roche

The big news this week was Roche’s announcement that they plan to invest $50 billion in U.S. pharmaceutical and diagnostics operations over the next five years, including the development of new manufacturing and R&D facilities. CEO Thomas Schinecker said during the company’s earnings call that this would be almost double its investment in the U.S. compared to the previous 10 years.  

Roche’s $50 billion investment will fund several key projects, including a new gene therapy manufacturing site in Pennsylvania, a continuous glucose monitoring facility in Indiana, and a 900,000-square-foot manufacturing center for weight loss medicines at an as-yet undisclosed location. Once the new infrastructure is operational, the Swiss-based company expects to export more medicines from the U.S. than it imports.

With 13 manufacturing sites in the U.S., Schinecker said Roche is “probably in a much better position than most other companies in terms of our manufacturing capacity.” He told analysts that Roche’s drug substance capacity utilization rate is currently 50%, giving it a lot of flexibility to adjust manufacturing volumes.

“We’ve driven a fivefold productivity increase in terms of yields from our cell lines, so what that enabled us to do is actually [with] some of our medicines that we already produced in the U.S., we could increase the manufacturing in the U.S. basically overnight of these medicines,” according to Schinecker.

When it comes to tariff mitigation measures, Schinecker said Roche has shifted inventories and has already started to increase manufacturing of a number of medicines in the U.S. However, he noted that the company will continue to invest in countries such as China, where the company is also expanding its manufacturing footprint.