Eli Lilly to cut in half its $2.5B investment in new German manufacturing site

Eli Lilly’s previously announced plans to build a new $2.5 billion high-tech manufacturing site in Alzey, Germany have been significantly reduced. Due to the German government’s cuts in drug pricing and reimbursement, the company said it “can no longer commit to the full vision for Alzey” and expects to slash the scope of the project by 50% or more.

“Stable and predictable economic conditions are essential for Lilly to operate viably and invest in the German market,” Lilly said in an emailed statement to Pharma Manufacturing. “However, the measures proposed in the BStabG significantly undermine predictability for business.”

Lilly’s decision to halve its planned capital expenditure on the Alzey site is in response to legislation in Germany — GKV-Beitragssatzstabilisierungsgesetz (GKV-BStabG) — which includes a mix of spending cuts and revenue-increasing measures projected to save the German healthcare system almost €20 billion in 2027 and more than €42 billion by 2030. 

In November 2023, Lilly announced a $2.5 billion investment in the Alzey facility to expand the drugmaker’s global injectable product and device manufacturing network to support increased demand for medicines, including its diabetes and obesity portfolio.

At the time, Lilly said the Alzey site — the company’s sixth in Europe — would employ up to 1,000 highly skilled workers such as engineers, operators and scientists, while leveraging state-of-the-art technology including automation and high-speed manufacturing lines.

“We are ensuring that the site becomes operational to meet the minimum supply commitments to patients in Germany,” Lilly said in Wednesday’s statement. “To that end, the site is still scheduled to begin operations at reduced capacity in 2027.”

However, Lilly added that the company’s “decision on whether to install the remaining capacity — and make Alzey the site we originally envisioned — is on hold until the Federal Government restores the stable, predictable economic framework that a long-term investment of this size requires.”

Meanwhile, CEO Dave Ricks told German business daily Handelsblatt the scrapped investment in Germany would go to Pennsylvania in ​the U.S. ​or ⁠a completely new site, according to Reuters, which reported that Lilly’s reduced capital expenditure would cut in half the ‌planned ⁠1,000 jobs at the Alzey facility.

“Europe isn’t completely off the table, ​but the U.S. makes ​the ⁠most sense,” Ricks is quoted as saying.

Last year, Lilly pledged $27 billion to build four new manufacturing “mega sites” in the U.S. In January 2026, the company announced plans to invest more than $3.5 billion in a new facility in Lehigh Valley, Pennsylvania that will produce its next-generation obesity therapies. 

In December 2025, Lilly revealed plans to invest $6 billion in a new API manufacturing facility in Huntsville, Alabama that will produce small molecule synthetic and peptide medicines. A $6.5 billion API facility in Houston, Texas, announced in September, will focus on domestic production of small molecule synthetic medicines. The drugmaker also plans to build a $5 billion API manufacturing facility in Virginia, near Richmond.