NEW YORK – Tariffs announced this week by the Trump administration could significantly impact the life science tools market, said industry observers.
The tariffs, which are set to go into effect on April 9 and include rates of 20 percent on imports from the EU and more than 30 percent on imports from China, will likely decrease profits for tools companies that manufacture their systems abroad while also raising prices for their customers.
There are also concerns that US trading partners could implement new tariffs in response, further impacting the industry.
In a note to investors, TD Cowen analyst Dan Brennan said the bank projects the announced tariffs will raise tools firms' COGS (cost of goods sold) by 2 percent on average, with firms including Agilent and Bruker projected to see COGS increases above that (an estimated 2 percent to 3 percent increase for Agilent and an estimated 4 percent for Bruker). Brennan noted that these figures do not take into account moves companies may take such as relocations of manufacturing to mitigate the effects of the tariffs.
Investment bank Jefferies projected in a note to investors that the tariffs will decrease earnings per share by an average of 5.6 percent across the tools companies it covers. It predicted a 9.2 percent hit to EPS for Bruker and 7.8 percent hits for both Thermo Fisher Scientific and Revvity. According to Jefferies, around 65 percent of analytical instrumentation sold in the US is produced overseas, with 25 percent coming from the EU and 23 percent coming from the Asia-Pacific region.
Bruker declined to comment on the tariffs, noting that it is still assessing their potential impact as well as possible mitigation opportunities. The company said it would have commentary on the situation during its Q1 2025 earnings call in May. Thermo Fisher, Illumina, Agilent, and Oxford Nanopore also declined to comment. Revvity did not reply to a request for comment.
During Bruker's Q4 2024 earnings call in February, President and CEO Frank Laukien noted that the firm's major manufacturing sites are in the US, Europe, and Malaysia, adding that it does not manufacture in China. He said that if needed, the company "can respond within a few quarters" to tariffs, including potentially by moving some production to the US.
Agilent CEO Padraig McDonnell similarly addressed his company's thinking on tariffs in a recent presentation. During the company's Q1 2025 earnings call in February, he said that the company has "a diversified supply chain with a manufacturing presence in all major regions of the world," adding that the company is taking action to mitigate the impact of tariffs. Regarding China specifically, he said the company is able to shift its supply chain from China into the US and Singapore. The new tariff rate for China is 34 percent. For Singapore it is 10 percent.
Marc Casper, Thermo Fisher Scientific's chairman, president, and CEO, said during the company's presentation at the TD Cowen Annual Healthcare Conference in March that the company exports little out of China. He added that it may pivot production between its Mexico and US production facilities to mitigate the effect of tariffs.
Daniela Hristova-Neeley, a partner at consulting firm Health Advances, said that many tools companies have already been considering shifting manufacturing locations due to factors including tariff threats and the proposed Biosecure Act.
Alex Vadas, managing director and partner with consulting firm L.E.K. Consulting, similarly observed that Chinese firms in particular have been establishing manufacturing capabilities in Europe and in the US out of concern over the Biosecure Act. He highlighted as potentially at greatest risk the Japanese and European tools vendors with significant exposure to the US market.
Hristova-Neeley noted that beyond their manufacturing locations, companies also need to think about the supply chains for the components used in that manufacturing, which, she said, could prove challenging.
"The supply chain complexity is so big that even the companies themselves have to spend a fair amount of time figuring out what comes from where," Hristova-Neeley said. She added that some raw materials may only come from regions like Asia that have seen high tariff rates applied by the administration.
There is also the question of whether bringing manufacturing to the US to avoid tariffs makes sense given the country's higher labor costs, she said. "Each company is going to have to do the math."
Generally speaking, larger firms have an advantage both in terms of manufacturing flexibility and the lobbying power to potentially win exemptions from the Trump administration, she added.
Tian Han, Vadas' colleague at L.E.K., where he is also a managing director and partner, suggested that the impact of the tariffs is compounded by federal science funding uncertainty, including grant cancellations and freezes at the National Institutes of Health.
"The tools market is not growing as aggressively … with NIH being a big barrier. Companies are going to be struggling to drive growth," he said. He noted that, given this, investors are looking to firms to maximize margins — a task likely made more difficult by the newly announced tariffs.
He also raised the possibility of retaliatory measures by countries like China, which has become a key market for tools companies.
"I think this is going to create different rules of the game for participation in China," he said. "They can always potentially levy more tariffs on US-based players agnostic of whether they have manufacturing facilities in China or not."
Han added that he expects more regional trade alliances to emerge, both within Asia and potentially between Asia and Europe.
"I think they may cultivate essentially their own market where they could make it more difficult for US-based companies to compete," he said. "That's going to be an important thing to monitor and think about, as well."