Amgen, Biogen have most ‘foreign exposure’ to Trump tariff threats: Jefferies analysts
As the biopharma industry scrambles to assess potential impacts from President Donald Trump’s latest tariff threats, two biotechnology companies — Amgen and Biogen — have the most “foreign exposure” to such tariffs, according to Jefferies analysts.
In response to Trump’s latest tariff threat, the analysts reviewed filings from companies that they cover to assess potential “foreign exposure” for biotechs that have manufacturing operations outside the U.S. and receive tax benefits from overseas operations.
The analysts noted in their report that Trump earlier this week commented on the potential for new trade policies from his administration, which are meant to bring biopharma manufacturing back to the U.S. by putting tariffs on products made overseas.
“This week President Trump commented that tariffs would be coming ‘at some point’ for pharma companies with ex-US manufacturing and specifically focused on Ireland where companies may receive favorable tax treatment,” the analysts wrote.
Their report showed that Amgen has manufacturing operations in Ireland and Singapore, which provide a benefit to their effective tax rate of -6%. The analysts also revealed that Biogen has a benefit to their effective tax rate of -8% due to taxes on foreign earnings.
However, the analysts said that Vertex Pharmaceuticals — with manufacturing in Boston, Massachusetts — and Gilead Sciences, with most manufacturing in California and its HIV drugs predominantly sold in the U.S., would be “less exposed” on a relative basis.
The Jefferies report also noted the overseas manufacturing locations of other biopharma companies, specifically their “exposure to Ireland.” In addition to Amgen, the companies with Irish operations include AbbVie, Bristol Myers Squibb, Eli Lilly, Gilead Sciences, Johnson & Johnson, Merck, and Pfizer.
Still, uncertainty remains as to “what if any focus Trump has on patents and IP domiciled in Ireland and on [companies] benefiting from patents there, i.e., not necessarily the manufacturing of the respective products,” according to the analysts.
At the same time, the analysts said the potential tariffs “are still uncertain and their exact impact and implementation isn’t fully known,” though they believe Trump has “made clear that he wants to push [companies] with foreign manufacturing and tax shields outside the U.S. to bring operations back to the U.S.”
Separately, the analysts said in their report that they are also watching for potential impacts from proposed tariffs on Canada, China, and the European Union (EU), which they contend “could impact development and manufacturing costs more broadly.”
The analysts pointed to results of a new survey released on Wednesday by the Biotechnology Innovation Organization (BIO), which showed that nearly 90% of U.S. biotech companies rely on imported components for at least half of their FDA-approved products, making the supply of these medicines particularly vulnerable to proposed tariffs on Canada, China, and the EU.
The survey of 42 biotech companies, conducted last month, also found a “staggering” 94% of U.S. biotech companies expect “surging” manufacturing costs, if tariffs are placed on imports from the EU.
“Proposed tariffs on the EU would force 50% of companies to scramble for new research and manufacturing partners,” according to BIO, with 80% of biotech companies surveyed indicating that they would need at least 12 months to find alternative suppliers — while 44% would require more than two years.