Biotech giants Gilead and Vertex Pharmaceuticals identified as exemptions from biotech tariffs
Biotech companies like Gilead (NASDAQ: GILD) and Vertex Pharma (NASDAQ: VRTX) might find themselves relatively safe from potential drug tariffs, as per a Wall Street Journal report. This is due to three key factors that make them somewhat insulated from tariff woes.
First, both these companies have a significant tax burden in the U.S. This, in turn, signifies that a large part of their operations are domestic. For Gilead, this is because most of its intellectual property is based domestically, while Vertex's tax rate is a reflection of its U.S.-centric manufacturing and research activities. A high tax bill often means less reliance on offshore profit-shifting strategies, thereby minimizing risks tied to imported goods.
Second, both companies have a substantial domestic manufacturing presence. For instance, Vertex's cystic fibrosis drugs, which are primarily manufactured in the U.S., benefit from orphan-drug exemptions and are hence shielded from tariffs. Analysts also point out that Biogen, another low-exposure firm, benefits from domestic manufacturing, showing this to be a structural advantage.
Lastly, by anchoring their intellectual property rights in the U.S., these companies sidestep complexities associated with cross-border royalty issues and avoid risks of tariffs on imported IP-associated products. Gilead's tax strategy explicitly links its 20% rate to its U.S.-registered IP, which analysts view as a key buffer against inflation caused by tariffs.
Comparatively, companies like Amgen and Regeneron face greater risk, as they have higher reliance on imports, and significant Irish operations respectively. As such, Gilead and Vertex can be considered as relatively safer bets amid tariff uncertainty.
- Despite potential drug tariffs, biotech companies like Gilead and Vertex, with their significant U.S. operations and intellectual property, may find themselves relatively insulated from tariff woes.
- Gilead's intellectual property, largely based domestically, and Vertex's U.S.-centric manufacturing and research activities contribute to their high tax bills, reducing the need for offshore profit-shifting strategies.
- Vertex's cystic fibrosis drugs, primarily manufactured domestically and benefiting from orphan-drug exemptions, are shielded from tariffs, demonstrating a structural advantage for domestic manufacturing.
- By anchoring their intellectual property rights in the U.S., both Gilead and Vertex sidestep complexities associated with cross-border royalty issues and the risks of tariffs on imported IP-associated products.
- In comparison, companies like Amgen and Regeneron may face greater risks due to their higher reliance on imports and significant Irish operations, respectively, making Gilead and Vertex relatively safer bets amid tariff uncertainty.
- Investors looking for safer options in the biotech sector during tariff uncertainty may findsolace in companies like Gilead and Vertex, given their domestic operations, intellectual property, and lower exposure to tariffs.
