One of the more unsettling features of a small open economy is being buffeted by matters beyond your control. In that context, the stated intention of US president-elect Donald Trump to target the pharmaceutical sector in his efforts to bring jobs back to the US, and to secure better value for money for the public purse, has caused a frisson of alarm here.
On a global scale, his contention that the pharma sector was "getting away with murder" dragged shares of leading drug companies and indices lower. In Ireland, there has been a quiet scramble to get a fix on what this sweeping public statement might mean in terms of policy detail and how it might impact on firms located here or interested in doing so in future.
Pharma and related industries account for roughly half of all goods exported from this State and provide employment for around 30,000 people. US firms make up the single largest portion of that with almost all the leading US pharma and medtech companies operating here. A significant number, including medical device giant Medtronic, have their domicile in Ireland, mostly by virtue of controversial corporate inversions.
The notion that Trump can force the physical relocation of jobs seems far-fetched. Moving production within existing plants can take a couple of years; building a new plant might take double that. The regulatory workload is major. Drug companies are unlikely to move in haste.
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The incoming president may have more success in persuading companies to return their tax dollars home. As the largest buyer of drugs in the world, Trump says his administration will take a tougher stance on price negotiations. Unusually, however, the US does not regulate drug prices and is barred from negotiating price for Medicare which accounts for a large part of the bill.
Ultimately it may be Trump’s promised tax policies, including a sharp cut in corporate taxes and a once-off amnesty on repatriated profits at a tax rate of just 10 per cent, that prove most persuasive. Whether he can implement those policies will be a matter of intense interest here.