The High Cost of Tariffs: How Eli Lilly's CEO Foresees a Future of Drug Price Hikes and Declining Innovation

In an exclusive interview with the BBC, David Ricks, the CEO of Eli Lilly, a leading US pharmaceutical firm, discussed the far-reaching impacts of President Donald Trump’s tariffs on global imports. Ricks proclaimed the tariffs a pivotal moment in US economic history, suggesting that the pharmaceutical industry may struggle to recover from the move. He expressed skepticism regarding the expected financial benefits for the US economy, which were promised by President Trump, indicating that although some companies might shift manufacturing back to the US, the reality would be more complex.

Ricks emphasized that in pharmaceuticals, where complex supply chains are critical, the tariffs would eventually hinder investments in new drug development, despite the industry’s existing exemptions from these tariffs. He highlighted that price caps in both the US and Europe mean tariffs would inevitably cause financial strain, indicating that companies would have to absorb these costs, potentially leading to staff reductions and cuts in R&D efforts.

Acknowledging the political context, Ricks maintained that while Eli Lilly does not support the tariffs, he respects the administration’s goals of boosting domestic manufacturing. He pointed out that while the US is a leader in global R&D (accounting for about 70% of it), much of the production remains abroad, which is also true for other industries such as electronics.

Addressing Eli Lilly’s international prospects, Ricks confirmed the ongoing development of an $800 million facility in Ireland, emphasizing the demand outside the US market. However, he warned about the decline of the UK’s status as a pharmaceutical powerhouse, attributed to slow regulatory processes and a poor uptake of new medicines which threaten its attractiveness to investors. He delivered a strong message to UK ministers, stating that significant declines in R&D investment were evident, and highlighted the need for a conducive environment comprising a robust intellectual property system, efficient regulation, and a commercial market that incentivizes innovation.

Ultimately, Ricks painted a concerning picture of the UK’s pharmaceutical landscape, warning of complacency in its perceived status as a leading life sciences country, especially as nations like Germany invest heavily in their healthcare sectors. Layoffs and reduced innovation in drug development seem to be looming outcomes if the current trajectory continues.