Big Pharma Remains Focused on M&A Despite Looming Tariff Threats

Industry Giants Reaffirm Commitment to Business Development

Major pharmaceutical companies are maintaining their focus on mergers and acquisitions (M&A) strategies, even as the industry faces potential disruption from threatened tariffs on drug imports. During recent earnings calls, executives from several Big Pharma firms emphasized that business development remains a top priority, signaling a determination to pursue growth opportunities despite economic uncertainties.

Bristol Myers Squibb (BMS) CEO Chris Boerner affirmed that business development "remains a top priority" for the company. BMS is undertaking significant cost-cutting measures, including a plan to reduce expenses by $2 billion by the end of 2027, on top of a previously announced $1.5 billion initiative. These efforts are aimed at creating "financial flexibility" for more aggressive business development activities.

Similarly, Merck & Co. CEO Rob Davis stated that their "desire and belief that we need to continue to identify new science-based opportunities to continue to build on the pipeline is unchanged." This stance comes despite Merck's expectation of incurring $200 million in incremental costs due to existing tariffs between the U.S., China, Canada, and Mexico.

Navigating Uncertainty: Tariff Impacts and Strategic Considerations

While maintaining their M&A focus, pharmaceutical executives acknowledged the complexities introduced by potential tariffs. Merck's Davis noted that the current situation "does make it more complex to get things done because [of] the uncertainty everyone is wrestling with." However, he emphasized that this is not deterring the company from "being aggressive and wanting to move forward and do deals."

Roche CEO Thomas Schinecker offered a more cautious outlook, suggesting that if threatened tariffs come into force, it could become "more difficult to make financial sense of any M&A deals" for the industry as a whole. Schinecker speculated that this might lead to a reduction in M&A efforts across the sector, at least in the short term.

Other companies, such as AbbVie and Sanofi, have taken a more reserved approach in discussing the potential impact of tariffs. AbbVie CEO Rob Michael stated it was "premature to speculate on the impact" due to the lack of concrete policy details, while Sanofi's CFO François-Xavier Roger declined to discuss various tariff scenarios, describing them as "very speculative by [their] nature."

Despite these challenges, the overall sentiment among Big Pharma executives appears to be one of continued strategic focus on M&A activities, with companies closely monitoring developments in trade policy while pursuing opportunities to strengthen their pipelines and market positions.