Reshoring, tariffs dominate 2025’s pharma manufacturing news

2025 has been a year of unprecedented pledges by Big Pharma to reshore pharmaceutical manufacturing to the United States, fueled by President Donald Trump’s ongoing threats to impose industry-specific tariffs and push for Most-Favored-Nation drug pricing deals.

“A wave of transformative U.S. drug-pricing agreements and record manufacturing investments from leading biopharmaceutical companies is poised to reshape the global landscape for pharmaceutical access, production, and industrial policy,” data and analytics firm GlobalData declared in a report this week.

Trump has effectively pressured Big Pharma to commit to large-scale U.S. investments. According to trade group Pharmaceutical Research and Manufacturers of America (PhRMA), the biopharma industry is investing $500 billion in new U.S.-based manufacturing and infrastructure. However, most estimates peg the amount at more than $370 billion over the next five years. Regardless, it’s a historic level of investment.

Leading the pack is Merck with its more than $70 billion investment beginning in 2025 to expand domestic manufacturing and research and development, followed by Johnson & Johnson’s commitment to invest $55 billion in the U.S.  

While these planned capital expenditures will take years to complete, they are without a doubt an unmitigated tailwind for the pharma manufacturing sector. At the same time, these investment commitments are not without their challenges.  

“Expanding U.S. manufacturing may make sense for high-volume or politically sensitive products, but organizations should anticipate tight labor markets and longer lead times for capacity rollout,” warned consulting firm West Monroe in its 2026 Life Sciences Industry Outlook. “Automation will be key to offset rising wages and enable domestic scale while maintaining agility in global operations.”

The sector in 2026 will continue to face manufacturing and supply chain risks requiring agility and flexibility in companies’ operational strategies, according to West Monroe. The firm said that tariffs and supply volatility are prompting “selective” U.S. investment while “keeping global networks intact.”

GlobalData in its report called out Eli Lilly’s commitment to make a $27 billion investment in building four new U.S. pharmaceutical manufacturing sites, and the drugmaker’s plans to build a $3 billion oral medicine manufacturing facility in the Netherlands to strengthen its global supply chain.

“Lilly’s investment in the Netherlands demonstrates Europe’s continued competitiveness in advanced pharmaceutical manufacturing,” Eóin Ryan, manager for health economics and market access at GlobalData, said in a statement. “Despite strong U.S. policy pressure to reshore production, the EU continues to attract large-scale projects, reflecting the importance of stable regulatory environments and established science clusters in global site-selection decisions.”

In its report, West Monroe pointed to contract manufacturer Fujifilm Biotechnologies’ new $3.2 billion biomanufacturing facility in Holly Springs, North Carolina as an example of how companies are expanding U.S. capacity while maintaining globally distributed networks.

At the same time, although large multinationals have the capacity to invest in domestic production and are well positioned to absorb these policy shifts, smaller biopharma companies may face greater pressure.

John Crowley, CEO of the trade group Biotechnology Innovation Organization (BIO), testified before a Senate committee in late October that smaller U.S. biotech companies need help building domestic capacity and capabilities. Crowley warned such companies increasingly rely on contract development and manufacturing organizations (CDMOs) for a range of critical services.

“American biotechnology companies of all sizes want to take part in the Trump administration’s drive to bring research, development, and manufacturing back to America,” according to Crowley. “But for smaller biotechnology companies to also take part, there must be sufficient contract manufacturing capacity within the United States. As service providers, contract manufacturers are not well positioned to quickly scale up without support.”