Is Big Pharma Focusing More on US-Based Manufacturing?

Earlier this year, Thousand Oaks, Calif.-based Amgen opened a nearly 300,000-square-foot final biomedicine product assembly and packaging facility in Central Ohio. Also, the company’s new multiproduct drug substance manufacturing plant in North Carolina, which broke ground in 2022, is expected to open next year.

The two facilities combined translate, Amgen explains, into a billion-dollar investment in additional manufacturing capacity to support expected demand for its medicines in the US market.

Ohio’s Lt. Governor Jon Husted called Amgen’s Ohio facility part of the “Made-in-America supply chain we need to live and thrive."

Amgen is not alone in its domestic focus, according to Robert Khachatryan, CEO and founder of US-based Freight Right Global Logistics: “The pharmaceutical industry is undergoing a notable shift, with more companies choosing to establish manufacturing facilities within the United States. This trend is reshaping the landscape of drug manufacturing, driven by a combination of government incentives, industry-specific needs, and supply chain strategy.”

Related:Big Pharma Targets New Cancer Therapy's Supply Chain Challenges

Pharma investments bolster supply chain resilience.

Among the reasons that pharma companies are increasingly investing in US plants are to bolster supply chain resilience and reduce dependence on international facilities, according to Khachatryan.

The pandemic was a wake-up call that illustrated the global supply chain’s fragility, according to Thomas Kluz, a venture capitalist and managing director of Venture Lab.

About 80% of world trade flows through countries with declining political stability scores measured by the World Bank, according to 2020 statistics. Yet, 72% of active pharmaceutical ingredient (API) facilities supplying the US market are overseas, with 13% in China and 48% in India, according to the US Pharmacopeia. Just 10% of APIs are made domestically.

Kluz says that Pfizer, Eli Lilly, and Merck, which have US facilities, “are not just tweaking things a bit, they are making bold, billion-dollar commitments to domestic infrastructure.” He cites a 2024 forecast report showing the global pharmaceutical API market will grow from $206.95 billion in 2023 to $219.76 billion in 2024 at a compound annual growth rate (CAGR) of 6.2%. It is expected to reach $279.03 billion in 2028 at a CAGR of 6.2%.

“This isn’t just about manufacturing. It’s a strategic reframing of how we think about pharmaceutical production, national security, and health care resilience,” Kluz says.

Federal order further strengthens the supply chain.

The US Food and Drug Administration's Executive Order 14017, aimed at strengthening US supply chains for essential goods — including pharmaceuticals — underscores federal efforts to ensure reliable domestic production, Khachatryan says.

And the pharma industry seems to be responding in a big way, with Khachatryan mentioning these announcements in 2024, alone:

Eli Lilly is investing $4.5 billion in a new manufacturing site in Indiana to increase production capacity and support US market demand.

BeiGene announced this year that it invested $800 million in a flagship US biologics manufacturing and clinical research and development facility in New Jersey. Also in 2024, AstraZeneca announced its new $300 million state-of-the-art facility in Rockville, Maryland, focused on manufacturing for critical cancer trials and the launch of its commercial cell therapy platforms.

Potential impact on drug costs

Production costs might increase initially but improvements in supply chain efficiency and a reduced reliance on international production could help to stabilize or even reduce drug prices in the long term. Savings on logistics and reduced import tariffs can counter higher domestic manufacturing production costs due to increased labor and regulatory compliance requirements, according to Khachatryan.

“Local manufacturing facilities lessen the need for extended transportation, reducing risks related to temperature fluctuations and handling that can impact sensitive drugs. Proximity to US distribution centers enhances control over storage and transport conditions, helping to preserve drug efficacy and safety standards throughout the supply chain,” Khachatryan says.

Quality control and proximity-to-market are other advantages with US-based pharmaceutical manufacturing, according to Khachatryan.

“We have an unprecedented level of oversight when a drug's entire life cycle from the initial ingredient production to its final packaging happens domestically,” Kluz says. “I've seen it firsthand, and it has been transformational for complex, temperature-sensitive medications like vaccines. If the treatment can minimize environmental exposure and maintain precise cold chain requirements, it can be the difference between an effective treatment and an ineffective one.”

Domestic production aligns closely with US regulatory standards, reducing the risk of compliance-related recalls or quality issues, which are more common with international manufacturing, according to Khachatryan.

“Navigating US regulatory requirements is critical to prevent compliance delays and ensure smooth market entry. Companies considering US-based manufacturing will need to assess their investment in advanced manufacturing technologies and skilled labor to maintain competitive production capabilities,” Khachatryan says.