In Wake of Trump Tariffs, Lilly Plans New US Pharmaceutical Manufacturing Sites

Global pharmaceutical manufacturer Eli Lilly and Company, whose headquarters are in Indianapolis, Indiana, recently announced that it will be building four new domestic manufacturing sites in the United States, less than a month after President Donald Trump announced the intention to impose steep tariffs on imports from Canada, Mexico, and China (1,2).

The news from Lilly came the same day that Trump also threatened a 25% tariff on goods imported from the European Union, the Financial Times reported (3).

After Trump announced the initial penalties on Canada, Mexico, and China on February 1—against which only the latter country has taken effect so far, pending ongoing negotiations—the Brookings Institution predicted that if the Canada and Mexico tariffs wind up being imposed, pharmaceutical exports from Mexico could fall by 61% (4). Should Canada and Mexico eventually enact retaliatory tariffs, as China has done, Brookings estimates the dropoff to climb to 72%. In addition, The Council on Foreign Relations calculated that US exports of vaccines, blood antisera, toxins, and cultures could collectively be one of the top five export categories most affected by the tariffs to the tune of $5 billion in exports to China, $2 billion to Canada, $994 million to Mexico, and $41 billion to the rest of the world (5).

In Lilly’s announcement on February 26, company chair and CEO David A. Ricks said an incentive passed during the prior Trump Administration was the impetus for the company’s decision to expand nationally—provided that incentive is continued during Trump’s current term.

"The Tax Cuts and Jobs Act legislation passed in 2017 during President Trump's first term in office has been foundational to Lilly's domestic manufacturing investments, and it is essential that these policies are extended this year,” Ricks said (1). “We believe that our investments in America and upskilling our nation's workforce will spark a significant ripple effect. For every job we create, many more will be generated, positively impacting the communities that host our innovative new sites."

Locations for those new sites and other development include both Research Triangle Park and Concord, in North Carolina; at the LEAP Innovation District in Lebanon, Indiana, where a new Lilly Medicine Foundry will also be opened; Kenosha County, Wisconsin, where a manufacturing site is being acquired and expanded; and the company’s home city of Indianapolis, throughout which expansions and updates will be made to multiple manufacturing facilities (1).

Three of the sites will focus on API manufacturing, particularly bolstering small-molecule chemical synthesis capability and strengthening Lilly’s supply chain (1). The fourth is intended to extend Lilly’s global parenteral manufacturing network for future injectable therapies, according to the press release.

In total, Lilly’s capital expansion commitments in the US since 2020 now exceed $50 billion, with the February 26 announcement representing more than half that figure, as commitments from 2020 through 2024 totaled $23 billion (1).

Lilly said roughly 13,000 high-wage jobs could be created through these additions and expansions: 3000 for highly skilled workers at the sites, when completed, among them engineers, scientists, operations personnel, and laboratory technicians (1). Close to another 10,000 construction jobs are expected to be needed.

"To deliver on our big bets on next-generation modalities like small molecules, biologics, and nucleic acid therapies, Lilly is investing in the state-of-the-art manufacturing infrastructure needed to deliver tomorrow's safe and reliable medicines," said Edgardo Hernandez, executive vice president and president of Lilly Manufacturing Operations, in the press release (1). "We are not just building facilities. We are creating a future where American innovation leads the world in pharmaceutical manufacturing, requiring a highly skilled workforce prepared to shape the future of health care. This is a significant step for our company, our communities, and the patients we serve."

References

1. Eli Lilly and Company. Lilly Plans to More Than Double US Manufacturing Investment Since 2020 Exceeding $50 Billion. Press Release. Feb. 26, 2025. https://lilly.mediaroom.com/2025-02-26-Lilly-plans-to-more-than-double-U-S-manufacturing-investment-since-2020-exceeding-50-billion
2. The White House. Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China. WhiteHouse.gov, Feb. 1, 2025 (accessed Feb. 4, 2025). https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/
3. Politi, J. and Inagaki, K. Donald Trump Threatens to Impose 25% Tariffs on EU Goods. FT.com, Feb. 26, 2025. https://www.ft.com/content/2f0288f6-3f6a-4334-b666-3f0122981842
4. Meltzer, J.P. Trump’s 25% Tariffs on Canada and Mexico Will Be a Blow to All Three Economies. Brookings.edu, Feb. 3, 2025 (accessed Feb. 4, 2025). https://www.brookings.edu/articles/trumps-25-tariffs-on-canada-and-mexico-will-be-a-blow-to-all-3-economies/
5. O’Neil, S. K. and Huesa, J. What Trump’s Trade War Would Mean, in Nine Charts. CFR.org, Feb. 1, 2025 (accessed Feb. 4, 2025). https://www.cfr.org/article/what-trumps-trade-war-would-mean-nine-charts