A new era of Made in America drug manufacturing
Last week, President Trump threatened tariffs on pharmaceuticals if manufacturers don't relocate operations to the U.S. On Wednesday, the CEO of Eli Lilly stood with Trump's commerce secretary in Washington, D.C., to announce a $27 billion plan to build four manufacturing "mega-sites" in the U.S.
Why it matters: The commitment illustrates the dance much of Big Pharma is engaged in as it tries to make inroads with a new administration bent on reshoring business activity and reducing dependence on China.
The big picture: Reshoring pharmaceutical manufacturing would be a shift for the industry, which still sources most drug ingredients from overseas and has seen its global supply chains buckle from disease outbreaks and natural disasters. Now, political winds from Washington could force a reckoning.
Hanging over it all is Trump's focus on cracking down on economic competition from China. CEO David Ricks said his company's expansion would prove key to expanding U.S. capabilities in synthetic chemistry and reduce its reliance on foreign suppliers.
The pharmaceutical giant — whose products include the blockbuster GLP-1 drugs Mounjaro and Zepbound — focused on its role in economic growth, saying its plan will create 3,000 jobs, as well as 10,000 construction jobs.
"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," Ricks said.
State of play: Lilly has a wide footprint in China and most recently announced a $200 million expansion of a manufacturing site in Suzhou. It also partnered with contract research firm WuXi AppTec on the active ingredient in anti-obesity drugs and a drug for lowering blood lipids, per Fierce Pharma.
Lilly has been on a global expansion binge, launching multibillion-dollar plant projects in Germany and Ireland, per Fierce Pharma.
The new plants announced Wednesday will come on top of a $3 billion upgrade to an injectables facility it bought in Wisconsin, as well as two new sites in North Carolina and Indiana.
The company would not disclose how much of Lilly's manufacturing will occur at these sites, but said the new facilities won't replace others elsewhere.
What they're saying: Ricks credited Trump's tax cuts from 2017, calling them "fundamental to Lilly's domestic manufacturing investments."
When asked about the pain caused by tariffs, he said the company hopes medical supplies are exempt because that adds cost in the near term.
"It's clear to everyone, including us here today, that the administration intends to use tariffs as a tool to drive the outcomes they're looking for to bring manufacturing capacity back to the U.S. In that sense, it's a stick or it's a punishment," Ricks said in response to a reporter's question.
"But we point out here today, as a company, that actually tax reform was the carrot," he said.
Between the lines: The pharmaceutical industry has been positioning itself as a key partner for Trump in addressing chronic illness.
Yes, but: The Trump administration's pressure on the pharma industry to bring production to the U.S. may represent a shift from Trump's first term, when lowering drug prices and increasing price transparency were the stated priorities, Anna Chorniy, a health economist at Icahn School of Medicine at Mount Sinai, told Axios in an email.
Bringing production to the U.S. could ultimately result in higher production costs, which could be passed on to consumers, she said.
Efforts to onshore drug ingredients for security purposes don't do much if they're not targeted at generic drugs, of which the vast majority come from China, said Mariana Socal, associate professor of health policy and management at Johns Hopkins University.
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Fitzgerald, who spent his career in real estate private equity, said American donors — especially the younger generation — expect transparency and accountability from recipients of their money, and know they can find non-Vatican Catholic charities that meet those expectations. 'We would expect transparency before we would start to solve the problem,' he said. That said, Fitzgerald said he hadn't seen any significant let-up in donor willingness to fund the Papal Foundation's project-specific donations during the Francis pontificate. Indeed, U.S. donations to the Vatican overall have remained more or less consistent even as other countries' offerings declined, with U.S. bishops and individual Catholics contributing more than any other country in the two main channels to donate to papal causes. A head for numbers and background fundraising Francis moved Prevost to take over the diocese of Chiclayo, Peru, in 2014. 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'He has a very good interest and also a very good feeling for numbers,' Klein said. 'I have no worry about the finances of the Vatican in these years because he is very, very clever.' ___ Franklin Briceño contributed from Lima, Peru. ___ Associated Press religion coverage receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
