Pharmaceutical companies say they are considering diverting as much as €100 billion they had planned to invest in Europe to the United States and other countries instead as part of a possible industry “exodus”.
The heads of 30 pharmaceutical companies have privately warned that Ireland and other EU states were at risk of losing out as many big firms were now planning to increase their manufacturing capacity elsewhere.
The chief executives of several pharmaceutical giants based in Ireland, such as Pfizer, Eli Lilly, and MSD, said there was a risk of an “exodus” of future investment as the industry redirected funds away from the EU and towards “the US or other fast-growing economies”.
In an April 11th letter to European Commission president Ursula von der Leyen, pharma executives said the sector was facing a “crisis”, in part due to the burgeoning trade war between the US and the EU.
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The pharma executives called for the EU to walk back proposals that would reduce the window companies could sell new drugs they produced before cheaper generic competitors entered the market.
The correspondence also lobbied for a pause on new rules that make pharmaceutical companies contribute toward the cost of urban waste water treatment, which the industry criticised as a “disproportionate” burden.
The letter, seen by The Irish Times, said the US-EU trade dispute could “accelerate” companies’ decisions to pause plans to invest in Europe.
The EU should also streamline the process for firms to get approval for new drugs, the CEOs added.
The pharma sector is one of the big pillars of Ireland’s economy, accounting for a significant portion of exports and contributing a sizeable amount to the State’s bumper corporate tax receipts each year.
Pharmaceutical products and medicines are not covered by a blanket 10 per cent tariffs US president Donald Trump has put on trade coming from the EU. However, there is an expectation at senior levels of the Government and the European Commission that Mr Trump will introduce hefty tariffs on the sector in the coming weeks or months.
The commission, the EU’s executive arm leading on tariff negotiations, is expected to lobby the US administration to hold off on such a decision while talks between both sides continue.
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Ireland would be particularly exposed to transatlantic tariffs on pharmaceutical exports as the sector accounts for much of its huge flow of trade to the US.
Pharmaceutical chief executives told Dr von der Leyen that significant investments many companies had been planning to make in EU states were now “potentially at risk”.
This included €50 billion that pharma firms had been due to spend on manufacturing plants and other capital projects over the coming five years, as well as €52 billion earmarked for research and development.
The letter was signed by the chief executives of Pfizer, Eli Lilly, MSD, Sanofi, Novartis and Gilead, who together employ more than 14,000 people in Ireland. The heads of many big European pharma companies, such as Novo Nordisk, Bayer, and AstraZeneca also put their names to the letter.
The executives told Dr von der Leyen they wanted the European market to grow rather than shrink. “This will require clear signals and radical policy change without which we foresee that much of the development and manufacturing of medicines in Europe will inevitably be redirected to the US or other fast-growing economies as each company makes its own investment decisions,” the letter said.
“Bold actions need to be taken rapidly as already over the next three months companies that responded estimate that a total of €16.5 billion, or 10 per cent of the total investment plans, are at stake,” it said.
The threat of tariffs has seen some companies announce plans to build up manufacturing sites in the US as one way to avoid import duties.
