A symptom of tariff threats, or a cure?

Drug firms with NJ ties will spend billions to expand US footprint

By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey

..... Seven pharmaceutical giants with a major presence in New Jersey have each announced billions or tens of billions of dollars in expansion within the U.S., and the timing is no surprise, some health care analysts say.
..... The expansion announcement come at a time when President Donald Trump has threatened massive tariffs on pharmaceutical imports to the United States, as well as other products ands material used to make them.
..... Other says it's not certain whether these plans - by Bristol Myers Squbb, Johanson & Johnson, Merck, Novartis, Novo Nordisk Roche and Sanofi - were already in the works. regardless of who won the 2024 presidential election.
..... Trump has already intruded tariffs on hundreds of billions of dollars of imports to the U.S., most notably China and the European Union, only to put 90-day pauses and reductions on most of those tariffs.
..... And Trump's "most favored nation" plan to rein in pharmaceutical costs has made drug-makers anxious, thought it's not likely the plan would prompt companies to mover their operation to the U.S.
..... Morristown-based Sanofi will spend $20 billion to expand its U.S. operations and American manufacturing.
..... Swiss drug-maker Roche is planning to spend $50 billion over the next five years to expand its U.S. operations, including in New Jersey.
..... New Brunswick-based Johnson & Johnson announced plans in March [2025] to spend $55 billion over the next four years on domestic manufacturing, research and technology, and a $2 billion North Carolina logistic facility.
..... Swiss drug-maker Novarits, which has its U.S. headquarters in East Hanover, is planning to spend 423 billion by 2029 at 10 of the U.S. facilities - including one in Millburn.
..... Rahway-based drug-maker Merck last month [04/2025] announced plans to spend $1 billion on a vaccine manufacturing site in North Carolina, plus $8 billion s on other upgrades by 2028.
..... Bristol Myers Squibb, which has corporate operations across North and Central Jersey, is planning to spend $40 billion over the next five years on technology, manufacturing and research and development, trade publication fierce Pharma reported this month. [05/2025]
..... Novo Nordisk -which is based in Plainsboro and makes the weight loss drug Wegovy - is spending $4.1 billion to expand U.S. manufacturing capacity in North Carlina.

Why are they expanding?

..... The White House has taken credit for these expansions saying a May 8 [2025] statement that Trump "is bringing drug manufacturing back" to the U.S.
..... Although Trump has not announced any pharmaceutical tariffs as of May 22, [2025] he "promised he will disclose pharma-specific tariff very soon," said Karen Anderson, a health care analyst with the financial services firm Morningstar Research.
..... "Drug firms are responding to this uncertainty by signaling that they are willing to promise significant investment in the U.S., hoping to persuade Trump to lessen or delay any potential tariff announcement," and soon continued.
..... The deluge of tariff updates and threat of more tariffs "certainly I think is accelerating not only the timing but also increasing the value, numerically in dollars, how much is being shifted over to the U.S.," said Jared Hlzm a health care analyst with Mizuho Americas, the American branch of Tokyo-based financial holding company Mizuho Financial Group.
..... "The majority is probably political," he said of those announcements. U.S. operations "are less impacted by those geopolitical headwinds" like Trump's tariffs.
..... Johnson & Johnson in particular stands to face $400 million in the event of tariffs,cost in 2025 in the event of tariffs, banking giant JPMorgan Chase said in an April 15 [2025] investors note, because of products the firm ships to China and from Canada and Mexico,
..... "Additionally, the company does not expect to be able to pass along meaningful tariff costs to customers," the note reads.
..... Once Johnson & Johnson's U.S. manufacturing is up and running, much of those products could be produced domestically rather than imported, the JPMorgan Chase analysis reads.
..... But it's not clear whether these expansions would have happens without Trump's tariffs and if former Vice President Kamala Harris had won the 2024 election, said Geoff Meacham, a biotech and pharmaceutical analyst at Citi.
..... "The question is ... were there already plans to build the new plants in the U.S.?" he said.

What is the money source?

..... The plans typically take place over a five- to 10-year period, so the sort of 455 billion expansion Johnson & Johnson plans would be easier for a company to handle financially, Meacham said.
..... All of these firms eyer likely eyeing favorable tax treatment, such as the ability to deduct research and development expenses from their taxes, or "tariff credits," he said.
..... Anderson noted that "some of this spending was already expected as part of normal capital expenditure plans."
..... "I think the biggest change in the past few months isn't that drug firms are building more manufacturing facilities, it's that they are choosing to build new manufacturing capacity in the U.S. rather than Europe's she said, despite the tax benefits of manufacturing in Europe.
..... Those befits typically include tax credits and lower corporate rates, but Anderson said they could be eloped by the harm from Trump's tariffs.
..... "I'd say that most companies are cutting costs to help maximize the profits they have to feed into their capital allocation strategies," Anderson said.
..... Additionally, firms like Novo Nordisk haven't announced share buybacks for 2025 - a process in which a corporation buys back its own shares to boost the value of the remaining shares - which could mean the firm is trying to keep more cash on hand.
..... Holz, of Mizuho, said many companies save money by shutting down gravitons outside of the U.S., and the savings in turn are spent on U. S.-based operations.
..... "These companies are very FlashCast-postive companies," Holz said, meaning they have more money coming in than leaving the company. "they don't need to raise money."

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