Last week, Eli Lilly also responded to the President’s tariff warnings by investing $27 billion to construct four manufacturing facilities across the U.S. in five years.
Pfizer CEO Albert Bourla said his company is ready to shift its manufacturing operations into the U.S. should the need arise. He made the comments at the 45th TD Cowen Annual Health Care Conference in Boston.
Speaking to analyst Steve Scala on Monday, Bourla explained that Pfizer has 13 production plants in the U.S., “probably the largest manufacturing network of any other company,” as per a transcript of the event from Seeking Alpha. A few of these facilities “are mega, mega sites,” Bourla added, pointing especially to those involved in the production of antibodies and sterile injectables.
So, “if something happens,” Pfizer will be well-positioned to respond to potential tariffs “by transferring from manufacturing sites outside, to manufacturing sites here the things that can be transferred quickly,” Bourla added.
Bourla’s comments on Monday come after he, alongside other Big Pharma CEOs, met with President Donald Trump late last month. When Trump won the election last year, many industry analysts and observers were optimistic, with some analysts raising the possibility of him repealing—or at least toning down—the Inflation Reduction Act (IRA)’s drug price negotiation program. Others, meanwhile, said the Trump administration could foster a more industry-friendly environment, particularly regarding dealmaking.
These hopes seem to have been dashed at the closed-door event, however. Reporting from Bloomberg at the time revealed that Trump threatened the pharma execs with tariffs if they continued to manufacture their drugs and other products abroad. The president also refused to give his word that he’d attempt to water down the IRA.
Trump’s tariffs play a big part in what analysts at Jefferies call “political uncertainty.” In a note to investors on Monday evening, the firm pointed to the difficult “macro backdrop” this year so far, which has weighed on the industry. While big companies with solid pipelines—such as Gilead, Amgen and Vertex—will continue to be largely insulated from these factors, small-to-medium players are and will likely face headwinds, according to the analysts.
Just a few days before the meeting, Trump also floated the idea of slapping additional duties of around 25% on imported products, including pharmaceuticals. These levies could “go very substantially higher over the course of a year,” according to reporting from CNBC.
Earlier this year, Trump also announced tariffs against Canada, Mexico and China. Though these additional fines are related to what the White House called the “extraordinary threat posed by illegal aliens and drugs” without substantiation, their effects on biopharma could also be profound. Seeking Alpha analyst Edmund Ingham wrote at the time that the China tariffs are especially problematic for the industry, particularly as companies are “increasingly looking to China to find promising new drug candidates.”
These tariffs—25% on imports from Mexico and Canada and 10% on goods from China—began March 4.
Following these threats, Eli Lilly last week announced that it was making a $27 billion commitment into the U.S., primarily to boost its domestic manufacturing capacity. Lilly will erect four new manufacturing facilities over the next five years, which the company says will in turn will create around 3,000 new jobs for engineers, scientists and other related workers. Construction activities will provide some 10,000 opportunities.
