In a significant announcement Tuesday, Eli Lilly’s Chief Executive Officer David Ricks unveiled plans for an unprecedented expansion of U.S. manufacturing capabilities, accompanied by Commerce Secretary Howard Lutnick at a Washington, D.C. federal building event. The pharmaceutical giant committed to investing $27 billion in
constructing four new drug manufacturing facilities across the United States, building upon its existing $23 billion commitment to domestic production since 2020.
The announcement echoed a similar declaration from eight years prior when Ricks promoted an $850 million U.S. manufacturing investment while advocating for Trump-era corporate tax reductions. This time, with far larger stakes, Ricks emphasized the critical importance of extending the 2017 tax cuts, which are set to expire this year, describing them as “fundamental” to Lilly’s investment strategy.
Three of the planned facilities will focus on producing active pharmaceutical ingredients for small molecule drugs, addressing what Ricks identified as a long-standing gap in U.S. manufacturing capabilities. The expansion comes amid pressure from the Trump administration, which has threatened to impose approximately 25% tariffs on pharmaceutical imports.
While acknowledging the administration’s use of tariffs as a “stick” to encourage domestic manufacturing, Ricks advocated for tax reform as the essential “carrot” needed to achieve desired outcomes. The House of Representatives’ narrow passage of a bill to extend the 2017 tax cuts, which reduced corporate tax rates to 21% and lowered taxes on repatriated foreign profits, marked a potential step toward securing this incentive.
During the announcement, Ricks also addressed other key industry concerns, particularly regarding Medicare’s drug price negotiation authority established under the Biden administration. The
pharmaceutical industry is pushing for modifications to extend the timeline for when small molecule drugs become eligible for price negotiations. Ricks warned that without such changes, companies might shift away from developing preventative medicines in favor of acute treatments, potentially contradicting the objectives of current HHS Secretary Robert F. Kennedy Jr.
Additionally, Lilly is advocating for the Centers for Medicare and Medicaid Services to complete rulemaking that would enable Medicare coverage of obesity medications. This change would affect access to treatments like Lilly’s GLP-1 medication Zepbound, which currently faces coverage restrictions under Medicare’s prohibition on weight loss drug coverage.
Commerce Secretary Lutnick praised Lilly’s initiative as aligned with presidential objectives for domestic investment, emphasizing the importance of rebuilding fundamental American manufacturing
capabilities, including steel mills and pharmaceutical precursor production. The investment strategy represents a significant step toward reducing dependence on foreign suppliers and strengthening domestic supply chain control.
The scale of Lilly’s planned expansion reflects broader industry trends toward reshoring pharmaceutical manufacturing capabilities, driven by a combination of regulatory pressures, tax incentives, and supply chain security concerns. The company’s announcement highlights the complex interplay between corporate investment decisions and government policy, particularly in areas of tax reform, drug pricing regulation, and healthcare coverage expansion.
The outcome of these policy discussions could significantly impact the future landscape of pharmaceutical manufacturing in the United States, with implications for drug development priorities, healthcare access, and industrial policy. As these initiatives move forward, the industry continues to navigate the balance between government incentives, regulatory requirements, and business objectives in shaping its manufacturing strategies.