Eli Lilly to invest $27B in US drug manufacturing sites as Trump threatens pharmaceutical tariffs

Eli Lilly on Wednesday announced a $27 billion investment to build four new U.S. pharmaceutical manufacturing sites, bringing its total domestic capital expansion commitments since 2020 to more than $50 billion.

Of the four additional sites, three will focus on manufacturing active pharmaceutical ingredients (APIs) and “reshoring critical capabilities of small molecule chemical synthesis and further strengthening Lilly’s supply chain.” The fourth site “will extend the company’s global parenteral manufacturing network for future injectable therapies,” according to the announcement.

Lilly expects to announce all four future site locations in 2025 and anticipates that the new manufacturing facilities, which will create 10,000 construction jobs and more than 3,000 skilled jobs, will begin making medicines within five years. Construction on the sites is set to begin this year.

“Lilly’s optimism about the potential of our pipeline across therapeutic areas — cardiometabolic health, oncology, immunology and neuroscience — drives our unprecedented commitment to our domestic manufacturing build-out,” Lilly CEO David Ricks said in a statement.

Ricks noted that the Tax Cuts and Jobs Act legislation passed in 2017 during President Donald Trump’s first administration “has been foundational to Lilly’s domestic manufacturing investments, and it is essential that these policies are extended this year.”

Bloomberg reported that Trump warned a group of major drugmaker executives last week in a meeting at the White House, including Ricks, that his second administration is set to impose tariffs on pharmaceuticals and the companies should start moving their manufacturing businesses to the U.S.

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 last 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 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.