London (AFP) – British pharmaceutical giant AstraZeneca said Tuesday it would invest $50 billion in the United States by 2030 amid US leader Donald Trump’s threats to impose tariffs on the sector. The funds will boost its manufacturing and research operations in the US, including the construction of a multi-billion-dollar factory in Virginia, the company said in a statement.
“Today’s announcement underpins our belief in America’s innovation in biopharmaceuticals,” chief executive Pascal Soriot said. The US president has opened the door to potential tariffs targeting pharmaceuticals, which had up to now benefited from exemptions to his sweeping levies on imports from trading partners. He ordered an investigation into pharmaceutical imports, suggesting levies could reach up to 200 percent.
The United States is a key market for the pharmaceutical industry, and AstraZeneca said it expects 50 percent of its revenue to come from the US by 2030. AstraZeneca has already begun transferring part of its European production to the United States, it announced in April. Trump on Tuesday thanked AstraZeneca, saying it was “an honour”. The $50 billion is “a big investment, and it’s going to be a very good investment, I have no doubt about it,” Trump said. He added it would allow the company “to build various places all over the country, big manufacturing plants, pharmaceutical plants all over the country”.
While the drugmaker could become exposed to US levies on its European-made products, Soriot has said the impact would be limited due to the ongoing shift in production.
– ‘Losing patience’ –
Other major pharmaceutical companies, which had been exempt from tariffs for 30 years, have in recent months begun shifting investment and production to the United States. Swiss pharmaceutical giants Roche and Novartis and France’s Sanofi have all announced multi-billion-dollar investments in the US.
“For decades, Americans have been reliant on foreign supply of key pharmaceutical products,” US Commerce Secretary Howard Lutnick said in a statement. He added the new tariffs are focused on “ending this structural weakness”. Tuesday’s announcement included a new factory in Virginia, which will be the company’s “largest single manufacturing investment”. It adds to AstraZeneca’s previously announced $3.5 billion investment in the US by 2026.
“Soriot implied …that AstraZeneca wasn’t wedded to a particular country and that it would invest wherever it made financial sense,” said AJ Bell investment director Russ Mould. However, he noted that “the more business it does in the country, the greater the likelihood that investors might push for AstraZeneca to switch its main stock listing to the US”.
The pharmaceutical company abandoned plans earlier this year to build a £450 million ($606 million) vaccine plant in the UK city of Liverpool, citing timing issues and a reduction in subsidies offered by the government. The move “was the big clue that it was losing patience with the UK government,” said Mould. AstraZeneca reported a first-quarter profit rise of over 30 percent in April, noting that 40 percent of its revenue was generated in the US.
© 2024 AFP
