Johnson & Johnson (J&J) was the second life science company to guide on its expectations of the impact of Medicare Part D redesign (or Medicare modernization) as a result of the Inflation Reduction Act (IRA) on its full-year 2025 sales back in January. Not content with a runner-up position, J&J used its place at the front of the earnings season queue to be the first to quantify its expectations of the financial impact of the Trump administration’s import tariffs. J&J was rewarded for its transparency with a stock price fall of nearly 2% in premarket trading. It recovered to gain over 1% during its conference call, but then declined over normal trading to close down modestly into negative territory, matching a similar same-day close as the NYSE ARCA Pharmaceutical Index.
Key Takeaways
- J&J’s first-quarter earnings announcement was met with stock volatility, with the share price down at the end of the day.
- The themes of J&J’s conference call questions and discussion majored on the impacts of Stelara biosimilars, how to replace Stelara revenue, and drug tariffs
J&J’s stock price reception may have reflected some disappointment that the prospect of US import tariffs had not galvanized patients, hospitals and drug wholesalers to over-order drugs, boosting sales in the same way as rushed exports from China grew its economy in the first quarter. On the other hand, the ongoing trade wars should have benefited dollar-denominated companies. Since inauguration day the opening salvos of trade wars have weakened the US dollar by about 10% against the euro. This would have made sales outside the US more valuable when translated back into US dollars
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