Lilly's halt on plant expansion after Trump meeting sets off alarms in Ireland

Eli Lilly has reportedly halted expansion plans for a plant in Ireland.

Eli Lilly is rethinking plans to add a manufacturing line to a plant in Ireland. The announcement comes on the heels of President Trump’s recent call on drugmakers to invest in the U.S., leading some in the government to warn that Ireland needs to take steps to prevent other pharma companies from doing the same.

Irish Examiner reported over the weekend that Lilly was putting a €200 million investment to its manufacturing plant in Kindsdale, County Cork, under review, meaning several hundred anticipated jobs are now at risk.

A Lilly spokeswoman acknowledged the delay. She said in an email on Monday that the company had sought “planning permission” to expand capacity at the plant, but that a decision had not been made whether to proceed.

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“We can confirm that recently announced changes to Lilly’s global R&D and manufacturing facilities have not affected our plans in Kinsale.”

Lilly in January acknowledged 485 job cuts, mostly in its Alzheimer's division after a drug trial failure.

The company did not respond to questions Monday about whether Trump’s recent meeting with pharma execs, including Lilly CEO David Ricks, played any role in its investment hesitation are the Ireland site that employs about 500. At the meeting, Trump promised to speed up drug development and end "global freeloading" by countries that use price controls to keep their drug spending down. He urged drugmakers to invest in manufacturing in the U.S.

Ricks was reported as telling Trump at the meeting that Lilly is hiring manufacturing workers in the U.S. "as we speak."

To Labor officials in Ireland, the Lilly's balk just two weeks after the meeting with the president is a good indicator that drugmakers are feeling pressured to invest in the U.S. instead of Ireland.

“We now have evidence that a new expansion to Eli Lilly in Cork is halted and the creation of new jobs has been put on ice," Deputy Sherlock, a former minister for research and junior minister at the Department of Enterprise, said in a statement Sunday on the Labour party website. He urged the government to start trade missions to other countries to make sure foreign direct investment does not slow in a country that has used a low tax rate to attract business.

"We need all our ministers ... to ensure that jobs like those in Eli Lilly and around the country, are protected," Sherlock said.

A number of pharma CEOs were asked during earnings calls what the new president’s suggestions, like “border taxes,” would mean for their companies. Most said it is too early to know how U.S. tax policy will shake out. Sanofi CEO Olivier Brandicourt suggested that U.S. taxes on imported meds might violate World Trade Organization rules.

Brent Saunders, CEO of Allergan, which is based in Ireland, told analysts he doesn’t believe U.S. tax reform will materialize this year. His company is “plugged in” to the ongoing discussions, he said, but “there's no real plan yet for what tax reform will look like nor when it will appear.”

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