The news: Merck, Bristol Myers Squibb, and Roche reported expected impacts from Trump administration tariffs during Q1 earnings calls on Thursday.

• Merck CEO Rob Davis estimated $200 million in added costs for existing tariffs—mostly via China, but also Canada and Mexico trade.
• Roche is mitigating tariff effects for the year by moving inventories and increasing US manufacturing, CEO Thomas Schinnicker said. It’s also negotiating for tariff exemptions directly with the Trump administration, arguing its US exports offset its imports, per Reuters.
• Bristol Myers Squibb pointed to its flexibility to move manufacturing to counter tariffs, with CEO Chris Boerner noting he’s in talks with the administration about the impact of levies.

But also: Pharma continues to shift manufacturing to the US to contend with tariffs.

• Merck plans to spend $9 billion on US manufacturing and R&D through 2028, and expects that to increase.
• Roche earlier this week pledged $50 billion over five years in new US manufacturing and R&D.

Why it matters: Drugmakers are mitigating the effects of current tariffs and agreed current tariff effects won’t hit until the second half of the year. However, none of the companies factored in the 25% or higher tariff President Donald Trump has threatened on the pharma sector in their future outlooks.

The administration also launched a Section 232 pharma investigation with comments due May 7, which could lead to industry-specific tariffs. The pharma industry imported almost $213 billion in pharma products last year, per UN trading data, a 20% increase YoY.

Our take: Big Pharmas are taking a cautious tone on tariffs, lobbying directly with the administration, shifting manufacturing, and pledging new US investments to mitigate the anticipated effects. More significant business consequences, such as forced reductions in R&D and staffing and increased drug prices, will change pharma companies’ financial outlooks when the much larger Trump tariffs land.

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