Pharmaceutical Tariffs: Impact & Strategies with Former UK Trade Advisor

CGTN Europe spoke to a former UK trade department official Allie Renison.

Transcript

00:00Let's talk to Ali Renson. She's a former trade advisor to the UK government and now works for the consultancy firm SEC Newgate.

00:07Great to have you on the show again. Now tariffs on pharmaceuticals have been taboo really.

00:13I mean how surprised are you that medicines are now on the list.

00:18Well it's not just obviously medicines it's the wider pharmaceutical industry and I think one of the things that the sector is

00:23certainly holding its breath is to see is it just about finished products. Is it about raw materials that go into it.

00:28Is it inputs. Obviously I think the kind of the specter of the covid pandemic has certainly kind of underscore the need to try

00:37and continue exempting the medical sector from tariffs. It's interesting that actually during the pandemic we had a lot of export

00:44restrictions and actually under Trump's first presidency you know he decided to exempt simply for China tariffs on medical

00:52devices. But I think he's looked at Ireland and said how do we actually try and bring some of that manufacturing back. I

00:59wouldn't be surprised if we see a lot of carve outs and exemptions which is what the sector is lobbying for currently. But I

01:05wonder though will there be a ripple effect. What do you think the consequences might be for American pharmaceutical

01:11companies as well as European Chinese Indian pharmaceutical firms.

01:16Well since you when you speak to the sector they're saying that in terms of the impact they'll probably see a delay effectively of

01:24you know six to 12 months to actually see any serious ripple effect. But the question is also you know do we see a sort of delay for

01:33example on regulatory approvals. Do the costs necessarily go up. You know in terms of the inflationary impact on prices

01:42particularly if raw materials and the inputs are affected. Will these tariffs mean that the price of drugs medicines medical

01:51devices are they going to go up. Is the price of health care going to go up.

01:56I don't think necessarily health care writ large but certainly I think the cost you know ultimately the people who need to have

02:02access to the raw materials and the inputs and that's why I say there's a big question mark around how much of these tariffs that

02:08trump his trail. We don't know more detail besides pharmaceuticals writ large. Is that going to affect the entirety of that

02:13supply chain. It's going to be concentrated on finished goods on medicines themselves. I think it's going to be actually unlikely

02:20that the actual finished products medicines as you as you sort of mentioned in your report tend to be sort of exempt under WTO

02:26rules from a lot of these tariffs. But there are other ways in which the U.S. could tax the imports of that particularly around

02:34the sort of supply chain around inputs about raw materials. So really the devil is in the detail. But I think the anticipation is

02:40yes the cost is going to be inflationary and people will be charging the pharmaceutical companies will be charging more for to sort of

02:47get to reflect the increase of tariffs on their inputs. I appreciate you say that the devil's in the detail. But with these tariffs

02:54looming what's your diagnosis for the European pharmaceutical sector in the in the medium term.

03:01I think everything's going to become effectively a lot more expensive. I don't think we're going to see a huge forced relocation of

03:09particularly in Ireland the pharmaceutical industry to the US. I think it's probably likely that you will see some of these companies

03:16opening up new locations in addition to. But ultimately if you look at for example Ireland not the chief reason there's a lot of kind of

03:23R&D research and development and innovation that's done in Ireland and across the EU. But we might start to see basically is new

03:31investment facilities being opened up in the US which I'm sure the president the White House will say is due to the tariff threats. I

03:38think you're looking at cost increases and maybe parallel locations. But I don't think we're talking about entire supply chains being

03:45relocated to the US. What about countermeasures that you might expect. I mean the recent critical medicines act proposed by the

03:52European Commission suggests a by European principle for essential medicines. I think we're going to see a lot of stockpiling

04:01potentially. And you know I think that's one of the drivers behind what you identify there. And it's certainly going to be a lot more in terms

04:08of procurement. I think we're going to see European countries particularly the EU trying to invest more in making sure that there's a steady

04:14stream of income coming from sort of state governments from the EU to ensure that you know it doesn't actually the Trump tariffs do not

04:22incentivize any of that forced relocation away. But again I stress that I don't think because of the complexity and actually

04:30removing a lot of these supply chains I don't think we're going to see an absolute shift lift and shift over to the US.