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Johnson & Johnson shares jumped to their highest price in more than three months as the US-based healthcare group shrugged off the impact of tariffs and raised its earnings and sales guidance for 2025.
The company on Wednesday told analysts it expected its tariff costs this year would amount to $200mn, isolated to its medical technology division. That represents a halving from the $400mn duty costs estimate the company announced in April.
J&J shares were up 5.5 per cent in morning trading on Wall Street at their highest level since late March. This year, the stock has outperformed rivals Eli Lilly, Pfizer and Merck as well as the S&P 500 index.
On Tuesday, US President Donald Trump again threatened tariffs on pharmaceuticals as early as the end of July. “We’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff,” Trump said late on Tuesday.
New Jersey-based J&J said its second-quarter sales rose to $23.7bn year-on-year, above the $22.8bn forecast by analysts. The drug and medical equipment maker increased its adjusted sales growth forecast for 2025 from 2-3 per cent to 3.2-3.7 per cent as it looked beyond global trade tensions.
J&J said strong sales and “favourable foreign exchange” rates had prompted it to increase its guidance after warning of tariff costs in its first-quarter report.
Chief executive Joaquin Duato on Wednesday said that the Trump administration’s drug pricing and tariff policies remained uncertain, but he applauded the tax cuts that Congress approved this month. In April, Duato urged the US government not to apply levies on drugs, saying they could lead to shortages.
In the second quarter, J&J’s worldwide oncology sales shot up more than 20 per cent, offsetting declines in sales of its popular immune system medicine Stelara, which is facing a patent cliff. Sales in its smaller, medtech division increased 6 per cent.
Despite its growing sales, J&J is facing a threat from litigation alleging its talcum powder caused cancer. The company faces at least 60,000 talcum cases with more being filed daily, according to court documents. In April, J&J said it would keep fighting these lawsuits after a US judge rejected a third attempt to settle the class-action claims through bankruptcy.
J&J said on Wednesday it would challenge the plaintiffs’ expert witnesses in court this autumn and slammed the allegations as “junk science that the mass tort plaintiffs bar has funded”.
Goldman Sachs said in a July 10 report: “Our investor conversations point to some concern about the potentially trickier outlook in the back half of this year given the talc litigation overhang.”
