US president-elect Donald Trump has sent a warning shot across the bows of Big Pharma at his first press conference since winning the election in November.
Speaking in New York, Mr Trump said a large number of manufacturing companies – especially car manufacturers – had already announced plans to bring to the United States investments originally intended for Mexico.
He said the next focus would be on bringing home jobs in the pharma sector.
“We have to get our drug industry coming back,” Mr Trump said. “Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here. To a large extent.
“And the other thing we have to do is create a new bidding procedures for the drug industry because they’re getting away with murder.”
The president-elect said the pharma sector had a lot of lobbies, a lot of lobbyists and a lot of power.
“And there’s very little bidding on drugs,” he said. “We’re the largest buyer of drugs in the world, and yet we don’t bid properly. And were going to start bidding and were going to save billions of dollars over a period of time.”
Stocks slipped
US stocks slipped on Mr Trump’s remarks, led by healthcare firms. Investors were closely watching Mr Trump’s speech, looking for clues on where his priorities as the new president will lie after taking office on January 20th and how he plans to boost economic growth.
Eight of the 11 major S&P sectors were lower. The healthcare sector dropped 0.787 per cent after Mr Trump said the country needs more competitive drug bidding. The Dow Jones Industrial Average was up 3.99 points, or 0.02 per cent, at 19,859.52, the S&P 500 was down 5.26 points, or 0.23 per cent, at 2,263.64 and the Nasdaq Composite was down 20.77 points, or 0.37 per cent, at 5,531.05.
“Between linking hacking to China, saying pharma companies are getting away with murder and that the last administration created Isis, it is an intriguing press conference,” said David Holohan, chief investment officer at Merrion Capital. “Investors should be more worried of his presidency than they appear to be. He is a total loose cannon.”
The pharma and medtech sectors are critically important to Ireland, employing almost 50,000 people between them, according to IDA Ireland figures.
Nine of the world’s top 10 players have operations here and there are 33 pharma and biopharma plants in Ireland approved by the FDA.
Pharma-chemical products make up half the total goods exported from Ireland, according to CSO data.
Corporate inversion
US drug companies have moved much of their business outside the United States in recent years in an effort to cut their tax bills. In many cases, they have used a practice known as corporate inversion, where they buy a target in another low-tax country and then relocate their domicile to that country.
Ireland has featured more heavily than any other country in corporate inversions even though the Government here says it is not encouraging the process, which brings little or no financial benefit to the exchequer and runs the risk of reputational damage.
An attempt by Pfizer, the world’s largest drug company to relocate to Ireland by purchasing Allergan – itself the product of a previous corporate inversion – saw the Obama administration introduce strong new rules to deter the process.
However, Medtronic, one of the largest medical device businesses in the world, did successfully relocate its headquarter operations to Ireland with a corporate inversion of rival Covidien. Like many companies in this position, most operational control of the business remains in the United States.
– Additional reporting Reuters
