- British drugmaker GlaxoSmithKline believes itself to be well-positioned to adjust to any forthcoming changes in U.S. tax laws under the new administration, company executives said in an earnings call Wednesday.
- Members of the Republican party have proposed various plans for imposing taxes on goods imported into the U.S. as a way to re-balance the trade deficit and put U.S. exporters on a more competitive footing.
- As a multinational company headquartered in the U.K., Glaxo would likely be impacted in some way by such changes. Company CFO Simon Dingemans signaled Glaxo could benefit, but has the flexibility to adjust its organizational structure to respond in the event obstacles arise.
Although Glaxo is a British company, it has a heavy manufacturing footprint in the U.S. Outgoing CEO Andrew Witty pointed to the nine production factories and one R&D plant Glaxo has located in the U.S., giving it a production base which could mitigate some of the threats posed by a new tax system.
What's more, the company has been active in expanding such facilities. For example, it opened a new facility for vaccine development in Rockville, MD, last December.
Witty also emphasized on the call with analysts that Glaxo typically tries to transfer production of newly launched drugs into the U.S. as soon as possible. The HIV drug Tivicay (dolutegravir) and the Breo Ellipta asthma product, for example, are both manufactured in the U.S.
Glaxo said it would be ready even in the event of more unfavorable changes in U.S. tax law.
"[W]e have retained structural flexibility to move parts of the group around — including our R&D investments and intellectual property — to respond to where governments place the incentives," CFO Dingemans said.
Glaxo's comments mirrored the pragmatic, wait-and-see attitude of Irish biopharma Allergan.
CEO Brent Saunders acknowledged during Allergan's earnings call this week that, while a Trump tax plan would be overall favorable to the company, the potential for a border adjustment tax could restrict revenues to some degree.
"The reality is it's going to be very difficult for the U.S. to own every single piece of input that goes into its system," GlaxoSmithKline's CEO Andrew Witty said in the earnings call. "I don't think anybody realistically believes that. And we are definitely in the process as we speak of continuing to expand our physical footprint in America."
Glaxo's comments also come as uncertainty abounds for drugmakers over Trump's approach to the industry. The president criticized the industry in January for "getting away with murder," only to take a more balanced tack in a sit down with top pharma leaders. Trump has also pushed for pharma companies to bring jobs and manufacturing back into the U.S., echoing themes from his campaign promises.