Here's How the Pharmaceutical Import Tariffs Could Affect Eli Lilly

Core Viewpoint - Eli Lilly's stock has experienced significant volatility during Trump's second term, primarily due to the potential implementation of tariffs on pharmaceutical imports, which could negatively impact the company and the industry as a whole [1][2][3]. Group 1: Tariffs and Their Impact - President Trump has proposed a 25% tariff on imported drugs, although these tariffs have not yet been implemented [2]. - Eli Lilly's CEO acknowledged that expanding tariffs would negatively affect the company and the pharmaceutical industry, but did not specify the potential impact [3]. - The U.S. imported nearly $50 billion in pharmaceutical products from Ireland last year, making it a likely target for tariffs, which could pose a significant challenge for Lilly [4]. Group 2: Company Operations and Manufacturing - Most of Eli Lilly's product sourcing outside the U.S. comes from Ireland, with approximately $3.2 billion in long-lived assets reported in Ireland at the end of 2024 [5]. - Lilly has a large U.S. manufacturing footprint and is currently working on 10 active projects to build and expand facilities, aiming to supply the U.S. market entirely from domestic operations [9]. Group 3: Pricing Strategies and Regulatory Risks - President Trump issued an executive order for "most-favored nation" (MFN) drug pricing, which could pose a risk to the industry, although it may face legal challenges [9][10]. - If MFN pricing is implemented, drug manufacturers might adjust their pricing strategies to maintain profitability, such as increasing list prices in other countries while offering discounts [11]. Group 4: Future Outlook - The outcomes of the proposed tariffs and MFN drug pricing remain uncertain, but it is believed that Eli Lilly and other major pharmaceutical companies will navigate these challenges effectively [12].