MW Another drugmaker says tax reform, not tariffs, would drive U.S. manufacturing

By James Rogers

AbbVie sends a message to the Trump administration: Price controls hurt innovation and tax reform will boost U.S. investment

AbbVie Inc. took a little shot at the Trump administration's trade policy, as the drugmaker said Friday that rather than tariffs, tax reform is the key to boosting U.S. manufacturing.

The Illinois-based company $(ABBV)$, which is the parent of drug brands Botox and Skyrizi, echoed recent comments from fellow drugmaker Johnson & Johnson $(JNJ)$. AbbVie also brought up issues it had with other comments made by the administration, such as those about price controls.

"As we continue to invest and grow our U.S. operational footprint, we believe a more competitive tax policy building on what was accomplished through 2017 tax reform will encourage a sustainable shift towards U.S. manufacturing over the long term," said AbbVie Chief Financial Officer Scott Reents, according to a FactSet transcript.

He noted the first Trump administration had helped "level the playing field" with the tax reform, as it gave U.S. companies an incentive to invest in the U.S. and helped drive innovation.

Chief Executive Rob Michael added that AbbVie has already invested more than $5 billion of capital on building out its U.S. presence. He said there are plans to invest more than $10 billion into the U.S. over the next decade to support expansion into new areas, such as obesity.

Michael added that the 2017 tax reform helped AbbVie buy Allergan in a $62 billion deal, and move that company's headquarters to the U.S. from Ireland.

Related: Tariffs won't boost U.S. manufacturing - tax cuts will, Johnson & Johnson CEO says.

CFO Reents didn't totally rule out any benefits from tariffs, but said they should be "coupled with" tax reform, which would encourage U.S. manufacturing over the long term.

That wasn't AbbVie's only message to the Trump administration.

"We hope the administration contemplates the harm that international reference pricing could have on U.S. healthcare, the U.S. healthcare industry and future innovation," CEO Michael said. "I think anything like price controls, cost increases or higher tax, it just leaves less investment available across the industry to advance new innovative medicines."

Michael's comments come amid ongoing complaints about how similar drugs cost a lot more in the U.S. than they do overseas.

Also read: Why drug stocks are no longer a safe haven from the stock market's turmoil.

In addition, Michael pointed to policies in place that would discourage the company from getting its customers to shoulder the higher costs from tariffs, as cost cutting by itself won't mitigate the impact.

"I think what's more challenging is trying to pass the tariff impacts to our customers, especially with penalties in the government channel and with existing contracts in the commercial setting," Michael said. "So I don't see that as a viable source for mitigation."

One area where Michael praised the Trump administration was its willingness to address the so-called pill penalty under the Inflation Reduction Act put in place by the Biden administration, which reduced the time drugmakers had before they needed to start negotiating with the government on pricing.

Meanwhile, AbbVie's stock rallied 3.9% in afternoon trading Friday, after the company beat Wall Street expectations for first-quarter results and lifted its full-year outlook. It has run up more than 8% this week, which puts it on track to snap a six-week losing streak in which the stock tumbled over 19%.

Revenue for the latest quarter rose 8.4% from a year ago to $13.43 billion, beating the FactSet consensus estimate of $12.92 billion, and marking the company's ninth-straight top-line beat.

Sales were boosted by surging demand for the company's Skyrizi arthritis product, which saw revenue climb 70.5% to $3.43 billion. AbbVie also saw strong growth in its autoimmune drug Rinvoq, where revenue rose 57.2% to $1.72 billion.

However, sales of AbbVie's blockbuster immunology drug Humira continued their decline, falling 50.6% year over year to $1.12 billion.

Net income for the quarter was $1.29 billion, or 72 cents a share, down from $1.37 billion, or 77 cents a share, a year ago.

On an adjusted basis, which excludes nonrecurring items, AbbVie earned $2.46 a share, which beat the FactSet consensus of $2.38 a share.

AbbVie raised its 2025 adjusted earnings guidance to between $12.09 and $12.29, from $11.99 to $12.19. In a statement, AbbVie explained that its guidance does not reflect any trade-policy shifts, including pharmaceutical-sector tariffs.

Shares of AbbVie are over 5% in 2025, compared with the S&P 500 index's SPX decline of more than 6%.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 25, 2025 14:30 ET (18:30 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.