J&J boosts US investments by 25% over 4 years amid looming tariff threats

By Bhanvi Satija and Patrick Wingrove

(Reuters) - Johnson & Johnson has laid out plans to raise U.S. investments by 25% to more than $55 billion over the next four years, as a threat of drug import duties by the Trump administration compels companies to expand their manufacturing operations domestically.

The pharmaceutical giant said on Friday it planned to build four new plants as part of its investment, one of which would be set up in Wilson, North Carolina, where it officially broke ground earlier in the day. J&J did not disclose where it plans to build the other plants.

The 25% increase is compared to the company's investments in the past four years. At least two investors said most of these investments were already planned.

"The $55 billion number also includes a portion of their regular, annual R&D and IT spending. So, they've thrown a lot in there to get to a big, splashy number," said Jeff Jonas, portfolio manager at Gabelli Funds, which holds shares of J&J.

U.S. companies such as Eli Lilly and Apple are investing in domestic production amid Trump administration's push to manufacture locally.

Lilly recently committed to invest $27 billion in U.S. plants over five years to ease the impact from a potential 25% tariff on pharmaceutical imports.

The proposed levy could affect companies such as J&J and Pfizer as they have sprawling operations outside the U.S.

Apple also plans to invest $500 billion in the U.S. over four years, though this may include existing commitments.

"In the short term, they are trying to lobby for a tariff exemption. In the medium/longer term, everyone is moving even further towards a local manufacturing strategy. Even if there is a tariff deal, the era of free trade and unrestricted globalization is over," Jonas said.

Tariffs, according to him, are unlikely to hit J&J's medicine business, but could have a minor impact on the medical devices unit.

J&J, the world's largest drugmaker by revenue, said it already has more manufacturing facilities in the U.S. than in any other country. It also plans to expand existing U.S. sites and build new research and development infrastructure.

Brian Mulberry, portfolio manager at J&J investor Zacks Investment Management, said if J&J can capture their future pharmaceutical revenue from domestically produced products, then that "certainly will be better in the face of the proposed tariffs".

J&J's site in Wilson, where it plans to invest more than $2 billion, is expected to create 5,000 jobs during the construction stage, and more than 500 positions across the state.

The site will produce treatments for cancer, immune and neurological diseases, the New-Jersey based company said.

(Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove in New York; Editing by Shilpi Majumdar)