The recent jump in Irish exports was driven almost entirely by pharmaceutical giant Eli Lilly and its two bestselling weight-loss drugs.
In a report on the likely impact of US tariffs on corporation tax here, the Irish Fiscal Advisory Council (Ifac) said the rapid increase in exports during the first five months of the year was down to a single product category: protein and peptide-based hormones, which are used in the manufacture of these drugs.
US customs data showed all US imports of protein- and peptide-based hormones from Ireland during the period went to the state of Indiana.
Eli Lilly is headquartered in Indiana where it has several large manufacturing sites.
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The company produces the active ingredients for its two blockbuster weight-loss drugs, Mounjaro and Zepbound, at its plant in Kinsale, Co Cork, before shipping these to the US for further development.
Global sales of these medicines have surged in recent months. Last month the company upgraded its projected full-year earnings to $63 billion (€54.3 billion) this year, crediting the growing adoption of these drugs.
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Between January and May, Irish goods exports to the US surged by 153 per cent to €71 billion as firms rushed to get product into the US in advance of tariffs. Ifac said about $42.3 billion of this related to exports of protein- and peptide-based hormones.
“This spike in exports likely reflects strong US demand for these medicines, along with stockpiling in the US ahead of potential tariff changes,” it said.
In its report, Ifac assessed the threat to Ireland’s corporate tax base from US tariffs.
It said about three-quarters of Ireland’s €29 billion corporate tax haul came from a handful of large US multinationals in the technology and manufacturing sectors, leaving the exchequer exposed to a sudden shift in activity or profitability.
“For now, at least” most of Ireland’s big corporation taxpayers have not been directly affected by tariffs, it said.
Despite recent warnings, the short-term outlook for tax receipts was positive, it said, with profits in the tech sector potentially benefiting from the artificial intelligence (AI) revolution and profits in the pharma sector being helped from increased demand for weight-loss and other medications.
However, it warned this increased profitability could make corporation tax even more concentrated, which posed a risk to the State.
“Corporation tax is a key part of Ireland’s public finances. But it’s also one of the most volatile and uncertain sources of revenue,” report author Brian Cronin said.
“Our analysis shows that recent US policy changes haven’t yet had a major impact on Ireland’s biggest taxpayers. In fact, some of the changes may have temporarily boosted corporation tax receipts.”
He said this could change quickly, though.
“The US is trying to encourage more manufacturing at home and it’s also pushing to lower drug prices domestically. Both could reduce the corporation tax paid in Ireland,” he said.
However, Mr Cronin said there were countervailing factors that could increase Ireland’s corporation tax.
“These include the performance of blockbuster drugs whose active ingredients are made in Ireland. Profits in the tech sector are also rising, driven by advances in artificial intelligence and growing demand for their products and services,” he said.
