Trump poses challenge to Ireland with belligerence on Big Pharma

President-elect targets pharma and medtech sectors

US president-elect Donald Trump has thrown down a major challenge to Ireland by using his first press conference since winning the White House to target the pharma and medtech sectors.

Hailing his recent success in persuading a number of major car manufacturers to route new investment into the United States rather than to Mexico under threat of substantial import tariffs, Mr Trump turned his attention to drug manufacturers.

“We’ve got to get our drug industry back,” the incoming US president 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.”

Many US pharma companies have moved business out of the US in an effort to cut their tax bills. The incoming president has promised reform of corporate taxes to stem that tide.


The Republic has been among the most successful countries in persuading US pharmaceutical and medical device companies to establish manufacturing and research operations outside the US. More than 50,000 people are employed in these areas in Ireland, according to IDA Ireland, and US companies are the largest employers.

Any sustained attack on Big Pharma moving jobs abroad could thus affect the IDA’s chances of securing further investment from some of its biggest client companies.

Pharma companies are also facing pressure from the president-elect who also raised the prospect of tougher negotiations with companies over the price paid for their drugs.

Healthcare index

The S&P 500 healthcare index reversed course following Mr Trump’s remarks falling close to 2 per cent, before rallying slightly. The Nasdaq biotechnology index sank 3.8 per cent and was on track for its worst day since June 24th, a day after the Brexit vote.

European shares made modest gains for most of Wednesday’s session, but those gains were also pared by a pharma sell-off. Shire and AstraZeneca, both listed on London’s blue-chip FTSE 100, fell 3.2 per cent and 1.8 per cent respectively, while Swiss pharma groups Novartis and Roche both fell more than 1 per cent.

In Dublin, the Iseq index closed up 0.25 per cent, with cement-maker CRH posting a rise of 1.25 per cent in its share price.

The euro, meanwhile, fell to a one-week low of $1.0455 against the dollar, while sterling hit a three-month low against the US currency. Against the euro, mounting Brexit fears drove sterling to an 11-week low before it recovered a shade to trade at about 86.6p on Wednesday evening.

Investors expect more choppy trading in light of Mr Trump’s habit of making blunt criticisms of particular companies and sectors. The CBOE volatility index, also called Wall Street’s “fear gauge”, spiked as much as 6.4 per cent as he gave his first press conference as president-elect, but later calmed.

Corporate inversion

Pharma companies looking to escape the US tax net have, in many cases, used a practice known as corporate inversion, where they buy a firm in the same sector in a low-tax country and then relocate their domicile to that country, depriving US authorities of tax dollars in the process.

Ireland has attracted more high-profile corporate inversions than any other country even though the Government says it is not encouraging the process, which brings little or no financial benefit to the exchequer and raises the risk of reputational damage.

The threat of a tougher negotiation stance on price may be the stick Mr Trump intends using to reinforce his position in trying to persuade pharma firms to reverse their relocations, much like the threatened “big border tax” or import tariffs used to try to cow the car manufacturers.

In Dublin, David Holohan, chief investment officer at Merrion Capital said: "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. Investors should be more worried of his presidency than they appear to be. He is a total loose cannon."

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics