U.S. President Donald Trump has announced a plan to impose tariffs on pharmaceuticals in April, while U.S. pharmaceutical giant Eli Lilly has declared plans to invest at least $27 billion (38.77 trillion won) to build new production facilities in the U.S. This came just six days after President Trump pressured representatives of major U.S. pharmaceutical companies to transfer their production bases to the United States. Eli Lilly's proactive response has left other pharmaceutical companies in a quandary.
On the 26th (local time), Eli Lilly held a press conference in Washington, D.C., announcing plans to invest at least about 40 trillion won to build four new pharmaceutical production facilities in the U.S. over the next five years. Three facilities will produce pharmaceutical raw materials, while one will manufacture injection products, including the obesity drug Zepbound. About 80% of the pharmaceutical raw materials used in U.S. prescription drugs are currently produced overseas, including in China and India.
Eli Lilly, which has dominated the market with the GLP-1 class obesity drug Zepbound, became the world's top pharmaceutical company by market capitalization last year. The company is currently preparing to launch an oral obesity drug and is conducting clinical trials to expand the use of GLP-1 drugs for the treatment of other diseases, including Alzheimer's disease, heart failure, and metabolic fatty liver disease. David Ricks, Chief Executive Officer (CEO), noted, "This investment is aimed at strengthening our supply chain and manufacturing capabilities, but the main background is the changing policy environment," adding that "it will also create 13,000 jobs."
On the 22nd, President Trump held a closed-door meeting at the White House with CEOs from Eli Lilly, Pfizer, and Merck (MSD). During the meeting, Trump urged the CEOs to swiftly transfer their overseas production bases to the U.S., citing tariffs as a reason. He said, "I will impose a minimum 25% tariff on pharmaceuticals imported into the U.S.," while also pressing that "if production facilities are transferred to the U.S., there will be no tariffs."
After the meeting, CEO Ricks stated in an interview with local media, "If the current administration's wishes are realized, most industries will need to make significant investments," adding, "I believe there will be restrictions across all sectors, from building materials supply chains to energy, and we are trying to address these quickly." Howard Lutnick, U.S. Secretary of Commerce, assessed Eli Lilly's investment decision by saying, "Lilly is doing exactly what President Trump wanted."
Foreign media, including CNN in the U.S., report that Eli Lilly's swift response is partly due to awareness of Secretary of Health Robert Kennedy Jr., who was appointed by President Trump. Kennedy criticized that pharmaceutical companies view the U.S. as the largest market for obesity treatments because "they think Americans are foolish and addicted to drugs," stating that "obesity drugs will not make America healthy again." Media interpret this as remarks stemming from dissatisfaction with pharmaceutical companies that make huge profits despite the high cost of medications in the U.S.
Kennedy has been a "vaccine skeptic" spreading various conspiracy theories over decades, expressing distrust in vaccines. He has claimed not only that vaccines cause autism but also that federal agencies approved the use of vaccines for measles, flu, and other infectious diseases without adequate research. He officially took office as Minister after passing the confirmation process in the Senate on the 13th.
European and Indian pharmaceutical companies are keeping a close watch on the tariff imposition while also starting to seek alternatives. The European Union (EU) Commission, which has declared a firm response to U.S. tariffs, is taking a cautious stance regarding pharmaceuticals, as reducing production in response to U.S. tariffs could negatively affect European patients.
Frank Vandenbroucke, Belgium's Minister of Health, expressed, "The EU Commission must be very cautious in considering the unintended impact on the supply chain when preparing a countermeasure," adding, "In many EU countries, drug prices are fixed, so if tariffs are imposed, those drugs will not be supplied."
India is urging the reconsideration of tariffs, stating that it contributes to reducing medical expenses by supplying generics to the U.S. India exported pharmaceuticals worth approximately $8.7 billion (12.55 trillion won) to the U.S. last year and has the largest number of manufacturing facilities certified by the U.S. Food and Drug Administration (FDA) for good manufacturing practice (GMP).
Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), stated, "India supplies about 47% of the generics the U.S. needs," asserting that "India is a significant contributor to reducing the U.S. healthcare expenses." He predicted that if tariffs are imposed on Indian generics, there is a high likelihood of increased drug prices and supply shortages in the U.S.
Korean pharmaceutical and biotech corporations operating in the U.S. are also preparing measures against the tariff imposition. They are stockpiling inventories in the U.S., as well as pursuing local contract manufacturing (CMO).
Celltrion, which exports biosimilars (biopharmaceutical generics) to the U.S., announced on the 19th via its website, "We have completed the transfer of about nine months' worth of stock for the products scheduled for sale in the U.S. this year as of the end of January," noting that "even before tariff risks arose, we have been producing finished pharmaceuticals through local CMO companies and secured additional production capacity through negotiations."
SK Biopharm, which sells the epilepsy treatment 'cenobamate' (market name Xcopri) in the U.S., stated, "We maintain an outsourcing production method through CMO, which allows us to be more flexible and respond more quickly than direct production," adding that "since more than 70% of our costs are already incurred in the U.S., we believe that the company's measures against tariffs are feasible."