Novo Nordisk B - NOVO B (Danmark)

The pharma industry has been left reeling by the recent news of US government trade tariffs, with companies Eli Lilly (Indianapolis, IN, US), Pfizer (New York, NY, US) and Merck & Co (Kenilworth, NJ, US) boosting their US manufacturing presence to avoid a potential 25% tariff on imported pharma products.

Although World Trade Organization rules exempt most pharmaceuticals and their starting materials from tariffs, it is unclear whether the White House will continue to abide by this 30-year-old agreement. At a February 2025 press conference in Mar-a-Lago, Trump hinted that the US will impose a 25%+ tariff on pharmaceuticals in the future, after giving time to US companies to build more manufacturing capacity.

On 26 February, Eli Lilly announced plans to construct four manufacturing sites in the US at a cost of at least $27 billion. Three of the sites will focus on manufacturing active pharmaceutical ingredients (API), effectively reshoring the company’s small molecule API production. The fourth location will extend Lilly’s injectables production. Other contributing factors for the investment include high global demand for Lilly’s weight loss and diabetes drugs, Mounjaro and Zepbound (tirzepatide).

Large strategic production sites located in Brazil, China, Denmark, France and the US and local production sites located in Algeria, Iran and Japan.