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Investing.com -- Eli Lilly and Company (NYSE:LLY) CEO David Ricks spoke to the BBC about the long-term effects of the Trump administration’s sweeping tariffs on imports, in the first comments from a pharmaceutical executive since Wednesday’s announcement.
Ricks expressed concern over their potential impact on the pharmaceutical industry and characterized the decision as a pivotal shift in U.S. economic policy, one that may be difficult to reverse. While acknowledging the possibility that the tariffs could incentivize some companies to relocate manufacturing, he expressed skepticism regarding President Trump’s claims that the tariffs would generate hundreds of billions of dollars in additional revenue for the United States.
"I think it’s a pivot in US policy and it feels like it’ll be hard to come back from here," Ricks said.
Ricks also commented on the United Kingdom (TADAWUL:4280)’s waning influence as a pharmaceutical and life sciences hub. Eli Lilly, headquartered in Indianapolis, has a market value of $750 billion and employs approximately 50,000 people across the U.S., Europe, and Asia. The pharmaceutical sector, along with microchip manufacturers, has been temporarily exempted from the new tariffs due to their complex supply chains and the critical nature of their products.
Despite the current exemptions, Ricks anticipates that tariffs will eventually be applied to the pharmaceutical industry, leading to harmful effects on investments in new medicines. He explained that due to fixed drug prices in Europe and the U.S., the financial burden of tariffs would have to be absorbed internally, potentially resulting in staff reductions or cutbacks in research and development (R&D)—with R&D likely to be affected first.
While Ricks stated that Eli Lilly does not support the imposition of tariffs, he understands the intent behind them and respects President Trump’s political mandate. He highlighted that while about 70% of global pharmaceutical R&D is conducted in the United States, production is predominantly carried out overseas—a trend not unique to the pharmaceutical industry.
Eli Lilly is currently constructing a new $800 million facility in Ireland, where the company has over 3,000 employees. Ricks confirmed that this project would continue as planned, despite the broader concerns regarding tariffs and their impact on the industry.
Shares of Eli Lilly are down 6.2% on Friday after dropping 3.6% on Thursday.