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Eli Lilly said Wednesday it will build three manufacturing plants in the United States to make the key raw ingredients in its medicines, a push to bring home a critical part of the pharmaceutical supply chain that largely comes from foreign sources.
The Indianapolis-based drugmaker said it will more than double its planned investments in manufacturing to $50 billion, including plants it has announced since 2020, as part of what it called the largest manufacturing investment by a pharmaceutical firm in U.S. history.
The announcement came at an event with political trappings. Trump administration officials heaped praise on Lilly in a gilded auditorium in Washington bedecked with red company banners.
Lilly said it would spend $27 billion to build four new plants, three of which will make what are known as "active pharmaceutical ingredients" - compounds like tirzepatide, the main ingredient in Lilly's top-selling diabetes and weight-loss drugs Mounjaro and Zepbound. A fourth facility would make sterile, injectable drugs.
"We want our supply chains to be closer to our biggest markets, including, of course, the U.S.," Dave Ricks, Lilly's CEO, said in an interview with The Washington Post. The company said it is currently negotiating with several states, without disclosing them, and that it was seeking interest from others.
Drugmakers in the United States get much of their pharmaceutical ingredients from abroad, a subject that has raised national security concerns over worries that an event like a pandemic or war could cut off crucial supplies. Lilly's announced expansion continues a parade of corporate pledges to invest in American manufacturing, including by Apple and a consortium involving OpenAI, Oracle and SoftBank, as firms tune their message to the Trump administration's focus on American jobs.
Lilly's announcement credited President Donald Trump's tax cuts in 2017 with making its investments possible, adding that "it is essential that these policies are extended this year." The U.S. House of Representatives narrowly approved a bill on Tuesday that would extend tax cuts that are otherwise set to expire, along with deep spending cuts, that has yet to be negotiated with the Senate.
Ricks wants something from the government, too, for the planned manufacturing investments. "We want their assistance ... to speed up regulatory approval processes," he said. "Those asks are in."
Lilly is anticipating a "wave coming back to the U.S.," Ricks said. "It's in our advantage to get in front of that, because construction in this country is very difficult."
U.S. dependence on foreign suppliers of pharmaceutical ingredients has long been a sensitive issue, linked by some scholars to drug shortages. As of August 2019, 72 percent of the manufacturers supplying active pharmaceutical ingredients to the United States were overseas, with China alone accounting for 13 percent, according to congressional testimony from Janet Woodcock, then a senior FDA official. "Use of foreign-sourced materials creates vulnerabilities in the U.S. drug supply," she said in October 2019.
Woodcock, who left the FDA last year, praised Lilly's plans on Wednesday. "If they're using more advanced manufacturing techniques - I've been preaching this for 20 years - they could make stuff here without a huge environmental footprint and without a huge workforce," she said.
Kevin Hassett, director of the White House National Economic Council, said at Lilly's event that the sourcing of pharmaceutical ingredients is a "serious U.S. national security issue," crediting the first Trump administration's tax overhaul with creating the foundation "so that pharmaceutical production can be onshored again."
Also taking the stage was Secretary of Commerce Howard Lutnick, who said "Eli Lilly is doing exactly what the president is hoping would happen, which is having tens of billions of dollars of investment in America."
Marta Wosińska, a senior fellow at the Brookings Institution, said she's been expecting drugmakers to manufacture raw ingredients domestically in anticipation of the new administration's tariffs on foreign goods.
Lilly said it expects to create more than 3,000 jobs for skilled workers like engineers and scientists at the four new sites it announced Wednesday, in addition to nearly 10,000 construction jobs. The company said it is currently negotiating with several states and expects to announce all four sites this year. The sites will take four to five years to build, and the spending would occur over that time, a company spokeswoman said.