Eli Lilly undertakes ‘significant’ manufacturing expansion initiatives to shore up supply
Eli Lilly has stockpiled nearly $550 million worth of “pre-launch inventory” for its weight-loss pill orforglipron, in anticipation of regulatory approval, according to its 2024 annual report filed with the U.S. Securities and Exchange Commission. The drug candidate is currently in ongoing Phase 3 clinical trials for type 2 diabetes and obesity.
“When we believe that future commercialization is probable and the future economic benefit is expected to be realized, we capitalize pre-launch inventory prior to regulatory approval,” Lilly said in its annual report. “Pre-launch inventory capitalized as of December 31, 2024 was $548.1 million, primarily related to orforglipron.”
Lilly CEO David Ricks told investors earlier this month that the company’s tens of billions of dollars of investment to meet the increasing demand for its wildly popular type 2 diabetes and obesity drugs, Mounjaro and Zepbound, is paying off.
“Since 2020, our commitments to build, expand, and acquire manufacturing facilities now total more than $23 billion,” Ricks said during Lilly’s Feb. 6 earnings conference call. “The incretin market continues to grow rapidly, and Mounjaro and Zepbound are both gaining share of market.”
However, Lilly acknowledged in its annual report this week that there were “periods of 2024” when demand for the company’s incretin medicines exceeded production and while the supply of tirzepatide — the same active ingredient in Mounjaro and Zepbound — currently exceeds demand in the U.S., it’s a situation that remains dynamic and could be impacted by several factors.
“Despite our ongoing efforts to meet projected future demand by obtaining additional internal and contracted manufacturing capacity, there can be no assurances that such capacity increases that we expect will be needed to meet future demand will be realized as expected or that we will meet demand in launched markets in the future,” Lilly said.
Lilly’s active ingredient manufacturing and finishing operations, such as formulation, filling, assembling, delivery device production, and packaging, occur at locations in the U.S., including Puerto Rico, Ireland and several other sites globally. Lilly said that to support anticipated demand for its current and future products, the company has undertaken “significant” manufacturing expansion initiatives.
“Investments to increase our manufacturing capacity include sites in North Carolina, Wisconsin, Ireland, Germany, and two in Indiana,” Lilly said. “We also utilize and are expanding arrangements with third parties for certain active ingredient manufacturing, filling, finishing operations, and for device or component production and assembly.”
However, Lilly noted in its annual report that the company — along with these third parties and the pharmaceutical industry in general — depend on China-based suppliers for portions of its supply chain. The pharma giant said that if the proposed BIOSECURE Act, which seeks to limit supply chain reliance on Chinese companies, becomes law in the U.S. it “could affect elements of the pharmaceutical supply chain; although as currently drafted we do not anticipate the bill would have a material impact on our business.”
At the same time, Lilly warned that geopolitical tensions between President Donald Trump and China are rising. “In February 2025, the U.S. presidential administration imposed new tariffs on China and China responded with tariffs on select U.S. goods,” the company said. “If new legislation or additional trade restrictions are adopted or geopolitical tensions were to increase and disrupt our operations in, or related to, China, such disruption could significantly impact our business and results of operations.”
Pfizer CEO Albert Bourla in an interview with CNBC this week said his company’s manufacturing operations in Europe could be negatively impacted if the Trump administration imposes import tariffs on pharmaceuticals from the European Union. At the same time, Bourla noted that Trump’s recently imposed tariffs on China and the paused but looming tariffs on Canada and Mexico are not likely to impact Pfizer.
Lilly’s rival Novo Nordisk got good news from the FDA on Friday. The regulator reclassified the shortage of semaglutide — marketed as Ozempic for type 2 diabetes and as Wegovy for obesity — as “resolved” per its database.
In December 2024, the FDA issued a new decision reconfirming that Lilly’s tirzepatide injection shortage is resolved. In October, the agency announced that it was rethinking the shortage status of Lilly’s tirzepatide, which the regulator removed from its shortage list earlier in the month, after a lawsuit was filed by the Outsourcing Facilities Association. However, in the end, the FDA stood by its initial decision on tirzepatide.