Big Pharma Feels Fresh Urgency As Manufacturing Push Grows

Pharma companies in the U.S. have announced roughly $158B in new investments this year, most of which will be directed toward the development of new plants for manufacturing drugs of all kinds.

These plans have created a site selection race for municipalities and economic development teams across the country with decisions expected soon. Many see the competition to snag a new facility entering a final stage, with the winners possibly netting hundreds of jobs and significant tax revenue. 

“All the major pharma companies have made some kind of commitment,” NCBiotech CEO Doug Edgeton said. “I do think there is an urgency now that has not been there before.”

President Donald Trump’s aggressive push for reshoring manufacturing, and threats of tariffs, have further spurred Big Pharma firms to invest in U.S. facilities, with many seeking to expand existing plants to handle more production. 

But the industry’s reshoring efforts were truly kickstarted during the pandemic when it became clear the industry was too heavily reliant on overseas supply chains, said Bryan Northrop, executive vice president at Skanska USA, a developer of large biomanufacturing plants.

This current reshoring expansion is also taking place as the widespread popularity of GLP-1 drugs has spurred significant redevelopment and expansion of manufacturing for these weight loss treatments. 

Many Big Pharma firms seek to build new campuses but still aren’t sure about the exact location, Northrop said. But that will change soon, as meeting their goals to turn on new factories in a few years means finding sites and starting permitting, building and regulatory approval as soon as possible.

“I expect every week or so you're going to hear about a new landing spot for one of these bigger facilities,” he said.

North Carolina has long been a prime location for biomanufacturing and is considered to be a possible favorite for new projects. Edgeton said the state has seen a steady upswing in companies locating plants and factories, with a record $10.3B in announced projects last year, and is currently in contact with companies around the globe.

The state has also been one of the beneficiaries of a larger shift away from sites in the Northeast and West Coast, near traditional biotech research and development centers, to more central parts of the country with expanding healthcare institutions, growing skilled workforces and lower costs of business. 

The current battle to lure new plants has spread further afield, with Texas, Ohio, northern New Jersey and Phoenix also getting looks from site selectors.  Documents filed with the Texas comptroller suggest Eli Lilly is seriously considering a site in northeast Houston for a $5.9B plant. 

Local developer McCord Development has been working to secure a biotech tenant for the site and promote efforts for local training and biomanufacturing workforce development in the region. Proposed for a 236-acre site, the project is estimated to create 2,000 construction jobs, 600 permanent jobs and $2.5B in economic impact over the next decade.

Ohio Life Sciences CEO Eddie Pauline said the Columbus region, which landed an Amgen facility in New Albany in 2021 that just was provided a further $900M for expansion, says the region’s growing competitiveness in landing biomanufacturing investment is becoming more clear.

He’s seen larger firms look to locate plants within life sciences clusters, not just in the more rural locations where they have historically been found.  It helps that the state’s economic development agency, Jobs Ohio, can create a “really attractive package” of tax incentives and talent investment money or grants for training programs.  The Amgen expansion, for instance, came with a $500M Jobs Ohio grant.

He expects to hear significant news about new development deals this summer. 

“This is clearly in response to the need to show that the U.S. wants to not only innovate, but they make medicine here as well,” he said. “Pressure from the administration has expedited the reinvestment in some of these sites.”

Edgeton notes that having land for a factory is just the first of many considerations multinational firms make when locating new biomanufacturing sites. Workforce issues, water and wastewater infrastructure, power, and permitting processes all get significant consideration. 

Eli Lilly, which expects to announce four new facility sites by the end of the year that would begin manufacturing medicines within five years, asked states to submit details for proposed locations in February.

Submissions include information on logistics; power; water; access to interstates, rail and airports; environmental topics; zoning and ground studies, according to Eli Lilly Director of Global Communications Carla Cox.

The tens of billions of dollars in new development commitments would take four to five years to be fully operational, according to Northrop. But the groundwork for these decisions, and the larger impact expansion will have on the biotech real estate landscape, will likely become clear in the next few quarters.