J&J CEO says tax policy, not tariffs needed to incentivize US pharma manufacturing
Tax policy, not tariffs, are the most effective way for President Donald Trump to bring pharmaceutical manufacturing back to the United States, according to Johnson & Johnson CEO Joaquin Duato.
“If what you want is to build manufacturing capacity in the U.S., both in medtech and in pharmaceuticals, the most effective answer is not tariffs but tax policy,” Duato told investors on J&J’s earnings call Tuesday morning. “Since President Trump’s 2017 tax reform, the investment in manufacturing — both in medtech and in pharmaceuticals — has significantly increased.”
Duato credited the passage of the 2017 Tax Cuts and Jobs Act for J&J’s “already elevated commitment to the U.S. economy,” which he said will expand the company’s capacity to “manufacture next-generation medicine and devices for patients in America and around the world.”
However, Duato isn’t the first head of a major drugmaker to point to the 2017 Tax Cuts & Jobs Act as a significant incentive for its investments in U.S. manufacturing.
In February, Eli Lilly announced a $27 billion investment to build four new pharmaceutical manufacturing sites in the U.S. At the time, CEO David Ricks noted that the legislation passed in 2017 during Trump’s first administration “has been foundational to Lilly’s domestic manufacturing investments, and it is essential that these policies are extended this year.”
Last month, J&J announced plans to invest more than $55 billion in U.S. manufacturing, research and development, and technology over the next four years — a 25% increase in investment compared to the previous four-year period.
“At the completion of this investment plan, essentially all our advanced medicines that are used in the U.S. will be manufactured in the U.S.,” Duato said on Tuesday.
J&J broke ground last month on a new 500,000-square-foot biologics manufacturing facility in Wilson, North Carolina, which will focus on producing therapies for cancer, immune-mediated and neurological diseases. The $55 billion investment includes plans to build three additional manufacturing facilities and expand several existing locations tied to its Innovative Medicine and MedTech segments.
In 2025, J&J expects about $400 million in costs related to tariffs on medical devices. However, the company’s forecast doesn’t account for potential tariffs on pharmaceuticals.
The Trump administration on Monday officially launched an investigation into whether the importation of certain pharmaceuticals and pharmaceutical ingredients may threaten U.S. national security. The launch of the Department of Commerce probe comes on the heels of Trump’s threat last week to impose “major” tariffs on pharmaceuticals, promising that an announcement would be coming “very shortly” from his administration.