Last week, President Trump issued a warning to pharmaceutical companies, threatening tariffs if they don’t move their manufacturing back to the U.S.
In response, Eli Lilly’s CEO stood with Trump’s commerce secretary in Washington, D.C., to unveil a significant $27 billion initiative to establish four major manufacturing sites across the country, reported Axios.
This commitment emphasizes the pharmaceutical industry’s efforts to adapt to a new administration prioritizing reshoring jobs and decreasing reliance on China. Currently, most drug ingredients are sourced from abroad, raising concerns about global supply chain vulnerabilities due to disease outbreaks and natural disasters.
Eli Lilly CEO David Ricks emphasized that their expansion is crucial for enhancing U.S. capabilities in synthetic chemistry while decreasing dependence on foreign suppliers. Notably, the company, known for blockbuster drugs like Mounjaro and Zepbound, believes this initiative will create 3,000 permanent jobs and an additional 10,000 construction jobs.
Ricks stated, “This is a national announcement, one that will catalyze American health, economic growth and global competitiveness when we see a significant ripple effect, a greater opportunity that will flow to thousands of Americans and their local communities,” per Axios.
However, Eli Lilly maintains a strong presence in China, recently announcing a $200 million expansion of a manufacturing facility in Suzhou. They are also advancing projects in Germany and Ireland. The new U.S. plants will supplement a $3 billion upgrade of an injectables facility in Wisconsin, alongside additional sites in North Carolina and Indiana.
While the company hasn’t specified how much production will occur at the new facilities, they confirmed these won’t replace existing operations elsewhere. Ricks attributed Lilly’s domestic manufacturing plans to Trump’s tax cuts from 2017, calling them essential for the company’s growth.
Despite potential challenges from tariffs, Ricks expressed hope that medical supplies would remain exempt from these costs. He recognized the Trump administration’s intention to utilize tariffs to encourage manufacturing in the U.S., describing it as a “stick,” but he characterized tax reform as the “carrot.”
Ultimately, the pharmaceutical industry is positioning itself as a valuable ally in addressing chronic health issues.