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Trump has singled out Ireland for "luring away" US pharma

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Ireland says U.S. tariffs most serious challenge it faces

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Pharma companies are major employers and payers of tax

By Padraic Halpin and Maggie Fick

CARRIGTWOHILL, Ireland, April 3 (Reuters) - As U.S.

President Donald Trump takes aim at the mostly American-owned

pharmaceutical factories that dot the Irish countryside, the

people of Carrigtwohill are getting nervous.

A cluster of high-tech plants offering well-paid jobs - the

product of Dublin's strategy of attracting multinationals with

generous corporate tax policies - has transformed the southerly

rural town, quadrupling its population in just two decades.

The pharmaceutical industry has an outsized presence in

Ireland, employing about 2% of the workforce and generating tens

of billions of euros in taxes for government coffers.

But if Trump has his way, the good times could be about to

end. While pharmaceuticals were exempt from the sweeping duties

he announced on Wednesday, a U.S. official said the president is

planning separate tariffs targeting the pharma industry.

Pharmaceuticals accounted for 58 billion euros ($63 billion)

of the 73 billion euros worth of products Ireland exported to

the United States last year, a big contributor to the U.S. goods

trade deficit with the European Union that has riled Trump.

"He is going to do fierce damage," said retired butcher

Anthony Barry, 73, at a charity event at Carrigtwohill's

community centre, where the tariff threat to the Irish economy

dominated conversation.

"It's just a worrying time," he said, after one of the

event's organisers listed six family members who work at nearby

U.S. pharmaceutical facilities.

Trump has repeatedly singled out Ireland for "luring away"

U.S. pharma giants such as Johnson & Johnson ( JNJ ) and Pfizer ( PFE )

with decades of low corporate tax rates.

U.S. Commerce Secretary Howard Lutnick has characterised

Irish policy as a "scam" that Trump's administration will end

through tax changes and tariffs.

More than a dozen of the world's biggest drugmakers have

plants in Ireland, some decades-old. Many make medicines or

active ingredients for the $630 billion U.S. market, the

industry's biggest.

Merck ( MRK ) produces the world's top-selling prescription

medicine Keytruda for cancer near Dublin. AbbVie ( ABBV ) makes

Botox shots in Westport, while Eli Lilly's ( LLY ) Kinsale site

helps meet soaring U.S. demand for obesity drugs.

NO EXODUS

Trump's demands to shift manufacturing to the United States

have prompted several companies to ramp up investment there.

But industry sources have told Reuters that drugmakers are

reluctant to break and rebuild global supply chains, of which

Ireland is a linchpin, as doing so would be costly and complex.

"I wouldn't see an exodus happening as a result of this,

because of not just the track record (of pharma in Ireland) but

the lack of certainty around what the alternative is," said PwC

Ireland's lead advisor to pharmaceutical clients Harry Harrison.

While some were carrying out "very, very initial"

scenario-planning around moving production, including the cost,

tax and regulatory implications and supply chain impact, "I

would expect to see largely what is here now remain here",

Harrison said.

Investment agency IDA Ireland has announced at least a dozen

U.S. pharma investments of between $55 million and $1.8 billion

since mid-2022, and its head of life sciences Rachel Shelly said

there was no sign they would be paused.

Although Prime Minister Micheal Martin warned on Tuesday

that further investment decisions are on hold, "in the immediate

term, the uncertainty may cause companies to hold a little bit

but those decisions can't be put off forever", Shelly said.

"LAST THING I WANT"

While foreign multinationals have long cut their tax bills

by locating intellectual property (IP) in Ireland, the revenues

that have rolled in have left the country with the healthiest

public finances in Europe.

But the reliance on decisions made in U.S. boardrooms has

left it especially vulnerable to Trump's economic plans. Martin

has called it the most serious challenge facing the country.

Research co-authored by the Irish finance ministry found

that if permanent tariffs are introduced between the U.S. and

EU, Ireland's economy could be 1.8% smaller by 2032 than it

otherwise would have been.

The drag on exports, employment and growth would curtail the

recently re-elected government's ambitious tax and spending

plans, a hole that would deepen if U.S. corporate tax reforms

led to production and IP returning to the U.S., the paper said.

Pharmaceutical companies employ about 50,000 people directly

and thousands of shops and suppliers depend on highly paid

multinational workers' custom.

On Carrigtwohill's outskirts, parents wearing pharmaceutical

company IDs file in and out of Ireland's largest childcare

centre, located next to plants belonging to Merck ( MRK ),

AbbVie ( ABBV ), Gilead Sciences ( GILD ), GE HealthCare ( GEHC )

and Stryker.

Oliver Sheehan said many locals thought he and his wife were

"mad" when they relocated their crèche to the business park 25

years ago. Now they look after 450 children, employ 88 staff and

spent 3.5 million euros on a major expansion in 2019.

That growth mirrors Carrigtwohill, one of Ireland's most

diverse and youngest towns whose population has jumped to 5,500

over the last 20 years and is expected to double again by 2028.

Around 40% of Sheehan's business comes from workers at the

multinational companies, he says.

"We're certainly not bulletproof. We have a business model

that I feel we could overcome it, but it would certainly impact

us." Sheehan said of any potential hit from Trump's tariffs to

jobs and investment.

"It's the last thing I want."

($1 = 0.9245 euros)

(Editing by Catherine Evans)