President Trump’s tariffs could erode healthcare companies’ profits, but some may perform well regardless.
Eli Lilly and Novartis have taken steps to mitigate the potential impact.
Both drugmakers are innovative, deliver strong financial results, and have excellent dividends.
10 stocks we like better than Eli Lilly ›
President Donald Trump’s trade policies have caused tumult on Wall Street. The president has pushed for aggressive tariffs on imported goods in an attempt to bring manufacturing jobs back to the country.
Although there were hopes that certain sectors would be spared — including healthcare — it turns out that won’t be the case. Higher duties on imports could increase companies’ costs, which would squeeze their margins and bottom lines, and meaningfully hurt their stock performance. However, even with this threat, there are still some healthcare companies worth investing in, including Eli Lilly (NYSE: LLY) and Novartis (NYSE: NVS).
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Eli Lilly has been expanding its U.S.-based manufacturing capacity for years, but it has recently accelerated this effort. The pharmaceutical leader has now invested, or committed to invest, $50 billion to build or update manufacturing sites in the country since 2020, about half of which it announced during the first quarter.
According to management, once it completes its ongoing projects, it will be able to manufacture 100% of medicines aimed at U.S. patients within the country while also increasing its exports. In other words, the drugmaker will be mostly insulated from the impact of Trump’s tariffs.
And there are other reasons to invest in Eli Lilly. Here are three:
First, the company has demonstrated remarkable innovation in its core areas of diabetes and obesity in recent years. Its newer launches, Mounjaro and Zepbound, are already generating billions and allowing it to grow its revenue and earnings at a good rate.
In the first quarter, its top line rose 45% year over year to $12.7 billion. Net income was $2.8 billion, 23% higher than…
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