David Ricks, CEO of Eli Lilly, has characterized the recent imposition of tariffs on imports from abroad as a pivotal moment in the history of the US economy. In particular, he lamented the long-term signal this sends to the pharmaceutical industry, including about production and research and development. These tariffs, imposed in the Trump administration, are a heavy burden on manufacturers like Eli Lilly. These entities have made themselves completely dependent on globalized manufacturing to be successful.
Ricks delivered these candid observations during a meeting with senior UK ministers, including the Prime Minister, Health Secretary, and Business Secretary. He underscored that Eli Lilly will continue to press ahead with its development efforts. Increased costs from tariffs are set to shake up the industry dynamic dramatically.
I think it’s a pivot in US policy and it feels like it’ll be hard to come back from here. That future is not guaranteed, Ricks said, underscoring the seriousness of lawmakers’ crossroads.
The commercial launch operations for Eli Lilly are clearly centered outside of the United States. Per Ricks, almost 70% of all R&D in the world occurs in the United States. This fact underscores the country’s crucial part in making sure we get the next breakthrough medicine. He underscored the big picture that many manufacturing job activities have gone elsewhere. This trend is not limited to the pharmaceutical sector, but the electronics and software sectors as well.
“In pharma, about 70% of global R&D takes place in the United States. So we’re creating the next generation of breakthroughs and cures. But the production is heavily weighted outside the US,” – David Ricks
To illustrate, Ricks noted that Germans spend close to twice as much as their total health budget on medicines compared to the UK. This widening gap is incredibly alarming for the UK’s attractiveness as a destination for life sciences. He cautioned that it’s slow regulation that is preventing progress. As a consequence, patients in the UK are being denied major breakthroughs in health care.
“The UK is not a large market. What it could be is an exceptional market,” said Ricks. Here’s the bottom line — you need three things to make our industry work. On this score, the UK is indeed pretty great — by having a strong intellectual property system. You need a regulator that’s timely, efficient, and predictable – pretty good there as well. Most importantly, you need a commercial market that rewards innovation – and here there’s been significant backsliding.
Eli Lilly’s contribution to the UK has dropped sharply, raising the question of whether continuing investment could flow into the local economy. The company is currently constructing an additional £800 million facility in Limerick, Ireland, which will create jobs and bolster production capacity. Eli Lilly already has more than 3,000 workers in Limerick, doubling down on its decision to manufacture outside of the UK.
Ricks said he was most worried about the way that tariffs could hurt them on the inside. We can’t break those contracts so we need to absorb the cost of the tariffs and pay for them by making tradeoffs from within our own companies. I expect that to be done in terms of cutting personnel or R&D, and I expect R&D to go first. That’s a disappointing outcome,” he stated.
The American and British pharma industries are on shaky ground. To be sure, companies are facing unprecedented economic uncertainty on multiple fronts. Ricks further emphasized the need for a robust intellectual property system as a critical driver of growth and innovation within the industry.
“We don’t support tariffs, to be clear,” – David Ricks