American money is destroying the Irish economy from the inside

It’s keep-the-head-down time. In the week when Donald Trump’s latest hissy fit has led to the imposition of 10 per cent tariffs across the board, no country wants to appear on his mercantilist radar screen. But Wednesday’s publication of Eli Lilly’s annual report might be a red rag to the Mar-a-Lago bull. Eli Lilly is a large American drug company with a significant operation in Kinsale – and a single line in its 2025 annual tax filing captures something extraordinary, which is likely to incense the Maga crowd.

In 2025, Lilly paid a whopping $6.6 billion in taxes to Ireland. In contrast, this American flagship pharma giant paid only $3.3 billion in taxes to its home country. Ireland, a foreign country with a population of a just over five million, received roughly two times more tax income than the US, the home country with a population of 340 million. It’s not so much America First as America Last.

What is going on?

Mounjaro is going on. Eli Lilly’s miracle weight loss drug is a blockbuster. Big Americans are getting smaller. In clinical-trial terms, Mounjaro (and its sister brand Zepbound) has proved to be a life-altering drug for many overweight people. Millions who have found it impossible to shed kilos through diets and exercise, have seen the weight fall off them on these drugs. In those with obesity, Mounjaro has delivered weight loss on average of over 20 per cent when taken at high doses consistently over a 72-week period.

With millions signing up, in commercial terms, Mounjaro is a gold mine. Lilly reported $22.965 billion of Mounjaro revenue and $13.542 billion of Zepbound revenue in 2025. That’s $36.5 billion combined, or 56 per cent of Lilly’s total 2025 revenue.

This money, despite being mostly paid by customers living in the US, is being funnelled through Ireland largely because Lilly manufactures the active ingredients for Mounjaro and Zepbound in Kinsale and ships them to the US for further processing. By channelling the revenue back to Ireland, the American company saves on tax, and in turn throws off a revenue windfall for the Irish exchequer. So far, so clever.

But here’s the rub. Not only should the fact that an American company is paying twice as much tax in Ireland as it does in America, where the revenue is generated, annoy all Americans, but the money is destroying the Irish economy from the inside.

Any economy is a sensitive ecosystem of companies competing with each other, innovating, buying and selling, driven by creative talents of the domestic population. Successful economies, like successful ecosystems, should be varied and diverse, characterised by lots of people doing lots of different things, employing lots of different skills, selling lots of different products. Operating in a competitive environment that is evolutionary in nature, the more adaptive and resilient the economy, the more robust and less fragile it is. Companies that thrive and grow are those that adapt best to an ever-changing world. All the time, big companies get smaller and small companies get bigger, in a continual state of evolutionary churn. No one can with any certainty predetermine which company will succeed and which will fail. The market is the arbiter, and as such the evolutionary economy, like evolution itself, is a design without a designer.

Central to this dynamic is commercial diversity. The enemy of sustainability is monoculture. If the economy or society becomes overdependent on one sector or company, the economy flatters to deceive.

Ireland is dangerously overdependent on a small number of companies for far too much revenue. Three multinationals – Apple, Microsoft and Eli Lilly – account for 46 per cent of Ireland’s corporation tax, or about €13 billion in total. As long as this lasts, things look rosy. But that’s like saying in 1841 that Ireland’s burgeoning population of close to 8 million, almost completely dependent on one crop, the potato, was a sign of strength rather than fragility. If the crop failed, the country failed. We all know what happened.

Just how fragile is the tax base? Imagine the American companies were to leave – either because they were instructed to do so or because there were better opportunities elsewhere. If Ireland were to be more like Denmark – with lots of smaller local companies – how many domestically owned companies, in diverse sectors, would we need to replace the Yanks’ revenue?

Take a small Irish company making a healthy net profit of €500,000 per year. At the standard 12.5 per cent corporation tax rate, it would pay €500,000 × 12.5 per cent = €62,500 in corporation tax. To replace the €24 billion paid in 2024 by multinationals, €24,000,000,000 ÷ €62,500 = 384,000 companies such as this would be needed, and that’s just one year. Keep in mind that, according to Revenue data, there are approximately 310,000 companies filing tax returns in Ireland, but fewer than 6 per cent of all companies are reporting profits over €500,000. Just replacing Eli Lilly alone would require Ireland to create tens of thousands of new, healthy companies. Now you see the scale of the challenge.

The more Ireland depends on multinationals, the less chance we will have of building resilient companies and a diverse economy, simply because the multinationals pay young creative people too well. When housing costs are taken into account, why would you risk setting up your own company? Ironically, high housing costs, seen as a sign of wealth by some, taken together with a thriving multinational sector, seen as a sign of economic success, is probably the most disastrous combination militating against the establishment of a diverse, healthy economy.

In Christopher Clark’s classic, The Sleepwalkers, about the origins of the first World War, he describes the main players as drifting into catastrophe, oblivious to the threats, reassuring themselves in skirmish after skirmish that all would be okay in Europe. It didn’t turn out that way.

Looking at the fragile nature of the economy, although on the surface vigorous, could we be sleepwalking into the abyss?