Tariff questions swirl around pharma earnings

Here's what several large drugmakers said about tariffs when reporting earnings this morning:

Merck made a small downward adjustment to the top of its earnings guidance for the remainder of the year, and said it expects $200 million in additional costs related to tariffs imposed by the U.S. on imports from other countries, and by foreign countries, mostly from China, on U.S. goods.

Bristol Myers Squibb raised its 2025 revenue and earnings guidance, and said its revised forecast included the impact on U.S. products shipped to China, but does not account for any potential pharmaceutical sector tariffs.

Meanwhile, Roche and Sanofi confirmed their outlooks for the year, even with the tariff uncertainty.

François Roger, Sanofi’s finance chief, told reporters the company has been gaming out the impact of the levies. “We have run all scenarios,” he said.

Roche CEO Thomas Schinecker provided some more details on how it's trying to get ahead of the potential duties.

The Swiss pharma firm determined that just four of its medicines made up more than 90% of its potential tariff exposure, Schinecker told reporters on a call. Three of them were already produced in the U.S., and the company has been ramping up its production of the drugs there. The fourth had not previously been made in the U.S., so the company had to first do some tech transfer work, but it is now scaling up the manufacturing of the drug stateside. Schinecker did not disclose what the four drugs are.

The company has also been building up its inventory in both the U.S. and China.

markets

Biotech stocks bounce back (for now)

Biotech stocks surged the past two days, in a rare, and what may be brief, upturn for the industry that's been battered by uncertainties around tariffs and drug regulation.

They rose, along with the broader stock market, as President Trump seemed to soften his tone on the trade war with China. The Wall Street Journal reported yesterday that the White House is considering cutting the tariffs it's imposed on Chinese imports, in some cases by more than half.

(The drug industry relies heavily on raw ingredients from China.)

Biotech stocks are now almost back to where they were before Trump's “Liberation Day” announcement. But the president's next move on tariffs is, of course, unpredictable, and it's too early to breathe easy yet.

My colleague Adam Feuerstein — who has been understandably a bit doom and gloom lately — has more thoughts on the view from Wall Street here.

infectious disease

Novavax also bounces back

Among the biggest market winners yesterday was Novavax, whose shares soared over 16% after it said it believes its Covid-19 vaccine is approvable, based on recent conversations with the FDA.

An FDA decision on the vaccine was originally expected on April 1, but was delayed. Politico previously reported that a top agency official paused the approval process for the vaccine to ask for more data, raising concerns about political interference in scientific assessments at the agency.

venture

Flagship's new startup will develop ‘preemptive’ drugs

Flagship Pioneering announced this morning that it's invested $50 million to create a new startup focused on developing what it calls “preemptive medicines” to protect people’s health before they get sick.

The startup, called Etiome, has a platform that aims to forecast how individuals are likely to progress into diseases, define disease stages, and then develop drugs that can halt or reverse diseases before physical symptoms begin or long-term damage occurs.

If the term preemptive medicine sounds unfamiliar to you, that's likely because it's not widely used in Western drug development and health care. The concept traces back to Japan. Flagship asserts that it's different from preventative medicine, which stops a disease from ever occurring.

The firm, which invests in and creates biotechs, bought into the preemptive medicine idea a few years ago and hired former FDA commission Stephen Hahn to lead the group that created Etiome.

Never having to experience severe disease would, of course, be amazing. But this kind of effort raises the same types of questions as preventative treatments — how much do we need to use these drugs, which can be costly and carry side effects, in populations who aren’t yet sick?

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