Danaher forecasts $350M impact from tariffs, says it can largely offset potential headwinds
Life science tools and diagnostics company Danaher expects $350 million in incremental tariff-related costs in 2025 but says it can “largely offset” the impact through surcharges, supply chain management, cost actions, and relocating manufacturing.
“The macro backdrop has become more dynamic since the start of the year, with rising geopolitical and trade tensions contributing to greater uncertainty across global markets,” Danaher CEO Rainer Blair told analysts on Tuesday’s earnings call.
However, to offset the potential impact from tariffs, Blair said Danaher will use a “combination of supply chain adjustments, surcharges, manufacturing footprint changes, and other cost actions.”
Blair highlighted Danaher’s recent regionalization of its U.S. bioprocessing capacity with a $2 billion investment over the last five years, which he contends will help ensure supply chain security for the company and its customers.
“These additions include new single-use technology facilities in South Carolina, filter capacity expansions in Florida, and a cell culture media expansion in Utah, all of which are now online, as well as the resins manufacturing plant in Michigan that is nearing completion,” Blair said.
Large pharmaceutical companies and contract development and manufacturing organizations (CDMOs) have similarly put in place strategies for regional redundancy and capacity distribution to deal with the threat of tariffs.
“We’ve been executing to regionalize our manufacturing network of over 100 plants for several years now,” Blair told analysts on Tuesday. “So, we have a combination of both short-term and long-term countermeasures.”
Still, Barclays analyst Luke Sergott in a note to investors said the Danaher management team “has their work cut out for them” to offset a potential $350 million tariff headwind, while adding the company “should have an easier swing of things than most of peers.”
Leerink Partners analyst Puneet Souda in a note to investors called out Danaher’s tariff exposure “primarily in diagnostics (Dx) reagents that sell into China from the U.S. and bioprocessing/resins that sell into the U.S. from Europe.”
While company management on Tuesday’s call “said they have flexibility to localize, Dx selling into China and lower-value bioprocessing such as single-use plastics are likely to shift faster compared to products such as resins,” Souda wrote.
Blair said Danaher for now hasn’t seen “any meaningful change in demand from the current tariff situation or reshoring efforts,” adding that the company is well-positioned for “if and when that occurs” and bioprocessing is a “high-single-digit grower, both in 2025 and for the long term.”