Roche and Sanofi Seek Ways to Sidestep Potential Trump Tariffs
(Bloomberg) — Two of Europe’s biggest drugmakers said they’re looking at ways to protect themselves from US President Donald Trump’s potential tariffs.
Switzerland’s Roche Holding AG is moving production for some medicines as well as building inventory in the US and China. And Sanofi is considering more manufacturing investments in the US, where it makes almost half of its sales, a day after France softened its approach to the trade clash with Trump.
“We are considering additional measures obviously, potentially including investments in the US,” Sanofi’s chief financial officer, Francois-Xavier Roger, said on a conference call.
Roche pledged this week to invest $50 billion in the US in the next five years, the latest major drugmaker to announce American expansion plans. Trump has repeatedly threatened tariffs on pharmaceutical imports, citing companies’ reliance on manufacturing sites around the world to supply the US.
Swiss drugmaker Novartis AG said earlier this month it would invest $23 billion over the next five years.
“There is an aim from the US government that all the products that are needed by the US are also produced in the US,” Roche Chief Executive Officer Thomas Schinecker said Thursday. The company “can and will absorb the impact” of tariffs, he said as it reported a 7.2% gain in first-quarter sales.
Roche shares were little changed in Zurich trading and Sanofi fell 1.2% in Paris. Neither is among the best performing European drugmakers so far this year.
Four Drugs
Four of Roche’s medicines potentially make up 92% of its tariff exposure, according to Schinecker. He declined to identify them.
At home, Schinecker is seeking to push promising experimental drugs forward more quickly even as he searches for external assets. The company agreed to pay Zealand Pharma A/S as much as $5.3 billion last month in a partnership for next-generation obesity drugs.
Crucial upcoming clinical trial readouts this year include studies in breast cancer, multiple sclerosis and smokers’ cough, Jefferies analysts said.
Revenue climbed to 15.4 billion Swiss francs ($18.6 billion) last quarter at Roche, in line with estimates. The pharmaceutical unit drove growth. Sanofi, meantime, reported better-than-expected profit, boosted by demand for its blockbuster skin and asthma drug Dupixent.
Both drugmakers confirmed their outlook for the year. At Roche, earnings per share excluding some items will grow in the high single-digit range at constant currencies, with sales rising in the mid single-digit range, the company said.
Roche isn’t increasing its overall capital expenditures and research and development budget, Schinecker said. The US investment falls inside the company’s existing spending plans, he said.
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