Lilly plans to construct a $2.5 billion manufacturing facility in Germany

Eli Lilly, a U.S.-based pharmaceutical company, has announced plans to construct its first manufacturing facility in Germany, specifically in the town of Alzey, for 2.3 billion euros ($2.5 billion). This move is in response to the escalating demand for novel therapies targeting diabetes and obesity. The investment, aimed at enhancing the production of diabetes and obesity drugs, including Mounjaro and Trulicity, as well as the associated injection pens, underscores the pharmaceutical sector’s efforts to meet the growing need for such treatments.

According to a statement released, the new facility is expected to commence operations in 2027, with Germany’s workforce playing a crucial role in augmenting Lilly’s supply of incretin drugs. Incretins, such as Mounjaro, are peptide-based medications that mimic gut hormones, suppressing appetite and stimulating insulin secretion.

Mounjaro, initially developed as a diabetes drug and recently approved for off-label use in weight loss in the United States, is positioned by Lilly as an obesity treatment. Eli Lilly an Novo Nordisk are at the forefront of a race to capture a projected $100 billion global market for anti-obesity treatments. Both companies have acknowledged the industry’s struggle to meet the rising demand, citing supply constraints.

The decision to establish a major production complex in Germany aligns with a broader trend in the pharmaceutical industry. In the wake of the COVID-19 pandemic revealing vulnerabilities in global supply chains, drugmakers are increasingly mindful of political pressure to manufacture essential healthcare products closer to the markets they serve. This strategic move by Lilly is anticipated to support the German government’s efforts to enhance the country’s appeal as a pharmaceutical center.

Health Minister Karl Lauterbach emphasized the significance of this investment in bolstering Germany’s pharmaceutical sector and ensuring swift access to new therapy options while reducing dependency on fragile supply chains. The choice of location was influenced by factors such as a skilled workforce, existing infrastructure, and the opportunity to create a manufacturing cluster with a company site in Fegersheim, France.

Despite potential regulatory challenges, including restrictions on the reimbursement of weight-loss drugs by the state health insurance system in Germany, Lilly remains committed to its investment. The company has already invested over $11 billion in global manufacturing over the past three years, with additional funds earmarked for expansion in Indiana, North Carolina, and Limerick, Ireland.

While acknowledging supply constraints during ongoing capacity expansions, Lilly’s investment in the region signals a commitment to driving conversations about pharmaceutical regulations. The company’s objection to proposed changes in the European Union’s protection period for pharmaceutical companies reflects a broader industry stance.

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