US pharma manufacturing investments reaching unprecedented levels: report

Despite rising costs, aggressive schedules, and unpredictable market conditions, large pharmaceutical companies have committed to investing more than $370 billion over the next five years in U.S. pharma manufacturing — a sector poised for growth amid significant challenges, according to DPR Construction’s Life Sciences Market Trends Q4 2025 report.

Driven by the Trump administration’s ongoing threat of imposing industry-specific tariffs, 2025 has been a year of monumental pledges by Big Pharma to onshore manufacturing, the commercial general contractor and construction management firm notes.

“While certain factors continue to limit growth in the research and development sector, the pace of manufacturing commitments, new project announcements, and project initiations are reaching unprecedented levels,” the report finds.

In October, Merck broke ground on a $3 billion manufacturing center of excellence in Virginia. The new facility will expand its Elkton site, adding small molecule manufacturing and testing capabilities, as part of a $70 billion U.S. investment beginning in 2025.

Last month, AstraZeneca said it will drop $2 billion to bolster production in Maryland and move its entire rare disease portfolio to the U.S., as part of the company’s $50 billion commitment to domestic medicines manufacturing and R&D.

In August, Johnson & Johnson pledged $2 billion to establish a dedicated facility at contract manufacturer Fujifilm Biotechnologies’ new biomanufacturing site in Holly Springs, North Carolina. J&J plans to invest more than $55 billion in U.S. manufacturing, R&D, and technology over the next four years — a 25% increase in investment compared to the previous four-year period.

“These efforts are supported by recent presidential executive orders aimed at streamlining regulatory processes to promote domestic production of critical medicines, as well as initiatives to strengthen the American pharmaceutical supply chain by establishing a strategic reserve of active pharmaceutical ingredients (APIs),” according to DPR Construction.

Their report concludes that the domestic pharma manufacturing sector is “evolving rapidly, with expedited review and approval processes for facilities dedicated to APIs, large-scale bulk biologics, and fill-finish operations.”

DP Construction notes that while the eastern U.S. remains the primary investment region, emerging opportunities in the western half of the country are becoming increasingly apparent. Still, two North Carolina metro areas recently ranked among the best for U.S. biologics manufacturing. Raleigh-Cary and Durham-Chapel Hill secured the first and third spots, respectively, as the nation’s most competitive markets for producing therapeutic biologics.

Labor shortages in construction

However, North Carolina’s biomanufacturing building boom is also a challenge as companies are competing to secure construction workers — including electricians — in the Tar Heel State, where biotechnology ranks as the fastest growing sector.

A separate Q4 2025 Market Conditions report from DPR Construction flags the challenges of labor shortages impacting a myriad of industries, including life sciences. The report calls out the results of an August survey from the Associated General Contractors of America and the National Center for Construction Education and Research which revealed persistent worker shortages — the leading cause of project delays.

The firm contends in its Life Sciences Market Trends Q4 2025 report that the overall architecture, engineering, and construction (AEC) sector is experiencing unprecedented growth and strategic partnerships combined with early engagement to secure skilled labor is the most effective approach for project success.

“Project teams are initiating design, procurement, and strategy discussions earlier in the timeline, ensuring alignment and addressing potential issues before they impact project schedules,” according to DPR Construction. “Planning and collaborating early among stakeholders — particularly in design, procurement, and contracting — are crucial for mitigating risks related to equipment sourcing, labor shortages, and pricing instability.”

One Big Beautiful Bill Act incentives

J&J CEO Joaquin Duato told investors in August that President Trump’s signing into law of the One Big Beautiful Bill Act (OBBBA) on July 4 provided certainty for the company’s $55 billion commitment to invest in the U.S. Duato previously made the case that tax policy, not tariffs, are the most effective way for Trump to bring pharmaceutical manufacturing back to the U.S.

John Reed, J&J’s executive vice president of Innovative Medicine, R&D, told analysts that OBBBA’s provisions include “permanent expensing for domestic R&D spend, permanent bonus depreciation and 100% expensing of qualified production property, including our newly planned facility in North Carolina.”

According to DPR Construction’s Q4 2025 Market Conditions report, OBBBA provided significant updates to Research & Experimental (R&E) expense treatment including changes that apply retroactively, allowing firms to recover costs capitalized between 2022 and 2024.

“For construction firms, this means a renewed opportunity to pursue deductions for technology-driven and innovative investments,” the report states. “Domestic R&E expenses, such as those tied to developing new materials, modular systems, or software driven construction methods can now be immediately expensed, easing tax burdens during the development phase.”

DPR Construction added that these changes in the law “make it easier to invest in experimental techniques, prefabrication, and automation — all crucial in today’s tight labor market.” Under the OBBBA, the report also pointed out that the 48D Advanced Manufacturing Investment Credit for semiconductor and equipment manufacturing facilities has increased from 25% to 35% for property placed in service after December 31, 2025.

“Expect a surge in manufacturing projects,” the report concluded. “Owners will be looking to take advantage, and that means more demand for specialized design, retrofits, and infrastructure work. It’s a win for contractors ready to lean into tech-forward builds.”