In what could be a direct rebuttal to President Donald Trump’s view on foreign trade, Eli Lilly CEO David Ricks called any promotion of deglobalization “dangerous.”
Ricks, who has been on the CEO job for about three months, made that comment in an interview with China’s state news agency Xinhua during the China Development Forum a few days ago.
“Certainly our company has been consistently in favor of free trade and liberalization of all trade rules,” he responded when asked about his view on deglobalizaion.
Even though Ricks then pulled the topic to intellectual property and a harmonized global regulatory environment, his notion that any effort to interfere with globalization is “troubling” is in stark contrast with the president’s more protectionist views.
Ricks’ comments were also stronger than those made by his Big Pharma counterpart at Johnson & Johnson. CEO Alex Gorsky, who also attended the conference in Beijing, described globalization as “critical” for J&J in a CNBC interview, and otherwise took a soft-pedal approach to Trump's U.S.-centric agenda.
In general, Trump’s strong stance of putting “America First” has not aroused much uneasiness among U.S.-based multinational pharmas—at least not in public. In late January, the president sat down with pharma leaders—including Novartis CEO Joe Jimenez, who also attended the Chinese forum, and Merck & Co. chief Kenneth Frazier—in what appeared to be a genial meeting.
And Ricks himself has been supportive. Trump, in line with his policy on getting manufacturing and thus more jobs back to the U.S., urged pharmas to “move your companies back” to the country. Ricks later said Lilly was already staffing up in manufacturing in the States.
Also after the meeting, he told Fox News that the president's desire for American manufacturing growth might lead to business-friendly incentives to do just that: “[W]e think there are things in the president’s proposed policies that could help us expand operations domestically.”
But Trump’s firm stance on international trade is widely seen as a step—or several steps—away from globalization. He regards regional trade deals like the Trans-Pacific Partnership as fatally flawed, and, upon taking office, immediately signed an executive order to pull the U.S. out of that agreement. He's been particularly critical of the North American Free Trade Agreement, promising to renegotiate it. And in remarks criticizing the EU, he has advocated for bilateral trade agreements with individual countries.
Trump has also proposed a 20% “border tax” on imports, which, depending upon how it's structured, could hurt drugmakers that produce their drugs abroad.
But Ricks, at least during a CNBC interview, was vocal in supporting the GOP’s border-adjustable taxation proposal, and called his past meeting with Trump “positive.” Ricks said the tax policy could help balance drug prices in the U.S. and other parts of the world where those prices are regulated.
After his pharma meeting, Trump made comments to that effect: "Our trade policy will prioritize that foreign countries pay their fair share for U.S.-manufactured drugs, so our drug companies have greater financial resources to accelerate development of new cures, and I think that's so important," Trump said.
What, exactly, the president meant by the "trade policy" comment wasn't clear. Eli Lilly reported 2016 revenues in the U.S. of about $11 billion, while international markets delivered in about $9.72 billion to the company's top line.