The law encourages companies to bring overseas cash back to the U.S., a process known as repatriation. They’re required to pay a tax on that money, and pharmaceutical companies have some of the largest stockpiles of overseas cash.
But the tax law President Donald Trump signed last month makes it cheaper for multinational companies to repatriate foreign cash, and they can use that money to fund transactions.
Medtronic CEO Omar Ishrak said the new law will allow the medical device giant to access nearly all of its cash, up from 55 percent of it. Repatriation will cost Medtronic between $2 billion and $3 billion over the next eight years on prior accumulated profit and cash, he said. The company will focus on reinvesting to offset the cost.
Celgene CEO Mark Alles said the changes will allow it to access about 60 percent of the cash it couldn’t beforehand, and the one-time tax could be between $800 million and $1.3 billion. Ahead of the presentation, the biotech company announced it would buy Impact Biomedicines.
More companies may clarify on how the law will affect them this week.