The boss of US pharmaceutical giant Eli Lilly says there is no looking back from Donald Trump’s decision to impose sweeping tariffs on imports from the rest of the world.
In an exclusive interview with the BBC, David Ricks described it as a watershed moment in US economic history, “I think it’s a pivot in US policy and it feels like it’ll be hard to come back from here.”
While Mr Ricks said he thought it may encourage some companies to relocate some manufacturing, he was doubtful it would also create hundreds of billions in additional revenue for the US promised by President Trump.
He also added that the UK’s status as a pharmaceutical and life sciences power was in decline.
Eli Lilly is a pharmaceutical giant worth $750 billion with 50,000 employees across the US, Europe and Asia.
Because of their complex supply chains and the often life saving products they make, pharmaceutical companies along with microchip makers were temporarily exempted from the tariffs imposed on all products imported into the US.
But Mr Ricks seemed in little doubt that tariffs would eventually hit and that would have damaging consequences for investment in new medicines.
He explained that drug prices were essentially capped in Europe and the US which meant the impact of tariffs would be felt elsewhere.
“We cant breach those agreements so we have to eat the cost of the tariffs and make trade offs within our own companies. Typically that will be in reduction of staff or research and development and I predict R&D will come first. That’s a disappointing outcome.”
Mr Ricks said he did not support the imposition of tariffs but understood its intention and respected Mr Trump’s political mandate.
“We don’t support tariffs, to be clear. In pharma, about 70% of global R&D takes place in the United States. So we’re creating the next generation of breakthroughs and cures. But the production is heavily weighted outside the US. And that’s not unique to our industry. It happened with electronics and software and other things”.
“So I think what this administration is saying is we want both. We want the means of production and we want the research and development intellectual property generation.”
Eli Lilly are in the process of building a new additional £800 million facility in Limerick in Ireland where they employ over 3,000 people. Mr Ricks said that development would proceed.
“There’s plenty of demand outside the US so we’d have to look at the flow of goods because we wouldn’t want to have to pay tariffs if we didn’t need to but I think for the moment that’s fine.”
But Mr Ricks said that its investment in the UK had been in decline and warned that slow regulation and poor uptake of new medicines threatened the UK’s reputation as an important life sciences hub and that patients were missing out on new advances in medicine.
Mr Ricks said he delivered some “candid” comments to senior ministers including the Prime Minister, Health Secretary and Business Secretary.
“The UK’s advantage is slipping. If you look at the numbers there is disinvestment in research and development. It’s been on a steady decline.”
So is the UK complacent when it thinks of itself as a life sciences super power?
“That’s one way to put it.”
Mr Ricks said countries like Germany spend nearly double of their health budget on medicines.
“The UK is not a large market. But what it could be is an exceptional market. You need three things to make our industry work. A strong intellectual property system, and the UK is quite good. You need a regulator that’s timely efficient and predictable – pretty good there as well but most importantly you need a commercial market that rewards innovation – and here there’s been significant backsliding”.
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