Lilly to Spend $27 Billion to Bolster US Drug Manufacturing

(Bloomberg) — Eli Lilly & Co. will spend at least $27 billion to build four US manufacturing plants, the latest company to brace for the potential impact of President Donald Trump’s tariffs. 

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Three facilities will make active ingredients for Lilly’s drugs, the company said Wednesday, bringing critical processes that are typically done overseas to American shores. Another plant will expand manufacturing capacity for Lilly’s pipeline of injectable drugs. 

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The new sites will come online within the next five years, creating more than 3,000 jobs for engineers, scientists, lab technicians and other skilled workers, Lilly said. The drugmaker said it’s in discussions with several US states to host the sites, with work expected start this year and generate some 10,000 construction jobs.

Lilly Chief Executive Officer David Ricks shared details about the plan with more than 100 lawmakers, patient advocates and other stakeholders Wednesday morning in Washington. It’s been less than a week since a White House meeting where Trump warned Ricks and other industry executives to bring their overseas production to the US or risk facing tariffs. 

Lilly shares rose as much as 0.9% at the New York market open after gaining 17% this year through Tuesday’s close. Shares of obesity rival Novo Nordisk A/S were down 1.4% in Copenhagen. 

The push to onshore manufacturing was already underway at Lilly, which has been investing heavily to boost production capacity for Zepbound and Mounjaro, its top-selling weight-loss and diabetes treatments. The company has put about $23 billion into US manufacturing projects since 2020, seeking to shorten supply chains and avoid geopolitical disruptions. 

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Officials described Lilly’s investments over the past five years — now approaching $50 billion — as the most ambitious manufacturing expansion in the company’s nearly 150-year history.

“The company’s growing rapidly and we need to support that,” Ricks told Bloomberg in an interview in September. “Our goal is to be self-reliant.”

Insatiable demand and supply shortfalls left patients scrambling to find Lilly’s medications last year. Much of the active base ingredient used in Zepbound and Mounjaro had at one point been made by WuXi AppTec Co., which was targeted last year in a congressional crackdown on Chinese biotechnology companies. 

Tariff Risks 

Just weeks into his second term, Trump has raised or threatened tariffs on goods from China, Mexico, Canada and the European Union. Trump has said the import levies will rebalance a global trading system that’s tilted against the US and persuade businesses to create domestic manufacturing jobs. 

Pharmaceutical goods have historically been exempt from tariffs because of their vital role in medical care. Still, Trump has said he would likely impose levies of around 25% on drug imports, with an announcement coming as soon as April 2.

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Many US drugmakers have said that the majority of their branded products are manufactured domestically and won’t be affected by tariffs. However, Pfizer Inc. Chief Executive Officer Albert Bourla said the company is closely watching potential tariffs on the EU, where it has at least 10 manufacturing plants. 

Lilly, which also maintains operations in the EU, invested $1 billion in September to expand a plant in Limerick, Ireland that will make biologic drugs such as the Alzheimer’s disease treatment Kisunla. The company also starts the process of making its weight-loss and diabetes drugs in Ireland.

Generic drugs are more vulnerable to tariffs. Makers of the low-cost, off-brand medicines rely heavily on imports from outside the US, particularly from China and India. The Association for Accessible Medicines, a trade group for makers of generic medicines, has warned that tariffs would cut further into the industry’s thin margins and risk shortages of vital therapies.

—With assistance from Damian Garde.

(Updates with shares in fifth paragraph.)

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