Pharma imports surged this year as drugmakers grapple with tariff threats
Drugmakers said tax cuts are better than tariffs for encouraging domestic manufacturing. They’re moving production to the US anyway.
The US imported $20 billion more pharmaceutical products in the first three months of 2025 than it did during the same period last year as drugmakers grapple with the unprecedented threat of import taxes on medicines made abroad.
President Trump said Monday that tariffs on pharmaceuticals will be unveiled in the next two weeks, the latest development in a string of threats to tariff the industry. Pharmaceuticals are typically excluded from tariffs under a World Trade Organization agreement that the US signed in 1994.
Drugmakers were fairly unified in their messaging to Wall Street this earnings season, emphasizing that tax cuts are better than tariffs while touting existing and planned domestic manufacturing. Data released from the Commerce Department on Tuesday suggests they’re likely front-running potential tariffs.
In the first quarter of 2025, $68.7 billion in pharmaceutical products were imported compared to $48.7 billion in the same quarter period last year. That data only goes up to March, meaning it doesn’t include the frenzy of threats and mixed messaging fired by Trump since April 2.
David Ricks, CEO of Eli Lilly, told analysts on May 1 the company is behind the “US government’s goals to increase domestic investment.” Like many drugmakers, it manufactures many of its products in Ireland, including its blockbuster weight-loss drug Zepbound, but has announced additional US investment this year.
“However, we don’t believe tariffs are the right mechanism,” Ricks added. He said future tariffs potentially “would have a negative effect on Lilly and for our industry.”
Johnson & Johnson CEO Joaquin Duato said tax cuts would be more enticing than import taxes, a sentiment shared in much of Corporate America. One reason drugmakers are concentrated in Ireland is because of its low corporate tax rate.
“If what you want is to build manufacturing capacity in the US, both in med tech and in pharmaceuticals, the most effective answer is not tariffs but tax policy,” he told analysts on April 15. Amgen CFO Peter H. Griffith said essentially the exact same thing on a May 1 earnings call: “To build on the manufacturing base in the US, we agree with our peers, but the most effective answer is not tariffs, but tax policy.”
Pfizer CEO Albert Bourla appeared to suggest the industry might be able to negotiate a way out.
“Right now [we’re] focusing more on the fact that we should not have tariffs,” Bourla told analysts on April 21. “And only if we have, we should try to implement measures.”
