Biopharma Leaders Push Back Against Tariffs Amid U.S. Manufacturing Expansion

As leading pharmaceutical companies aim to expand their U.S. operations with substantial investments, a notable number of biopharma executives are voicing their opposition to the current tariff policies enforced by the Trump administration. They argue that tax reform is a more effective means to support domestic industry rather than imposing tariffs.

Corporate Leaders Advocate for Tax Incentives

One prominent example comes from Eli Lilly’s CEO, Dave Ricks, who recently addressed investors during the company’s first-quarter earnings call. Despite Eli Lilly’s commitment to invest a remarkable $27 billion in U.S. production facilities, Ricks expressed his concern regarding the administration’s tariff agenda. “We support the U.S. government’s goals to increase domestic investment,” he stated. “However, we don’t believe tariffs are the right mechanism.” He further advocated for “enhanced” tax incentives or an extension of the Tax Cuts and Jobs Act as more suitable strategies for fostering growth in the U.S.

The Impact of the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act, enacted in December 2017 under the Trump administration, significantly reduced the U.S. corporate tax rate from 35% to 21%. As several biopharma leaders grapple with the prospect of tariff imposition on the pharmaceutical industry, they are increasingly urging for tax reforms instead of protective tariffs. Notably, Johnson & Johnson CEO Joaquin Duato and AbbVie Chief Financial Officer Scott Reents echoed Ricks’ sentiments during their respective company earnings calls, emphasizing the potential negative ramifications that tariffs could impose on the industry.

Eli Lilly’s $27 Billion Investment

With the aim of bolstering U.S.-based manufacturing, Eli Lilly has taken significant steps towards establishing a more robust domestic presence. The drugmaker announced its intention to construct four new manufacturing facilities within the U.S., with construction set to begin this year. Ricks stated that upon completion, these facilities would enable Lilly to produce all of its medicines for the U.S. market domestically. During the earnings call, he urged the Trump administration to initiate negotiations with key trading partners and remove existing tariffs and non-tariff barriers to ensure a level playing field for U.S. exporters like Lilly.

Strong Financial Performance Amid Tariff Concerns

Lilly reported an impressive 45% year-over-year revenue increase, totaling $12.73 billion in the first quarter of 2025. Much of this growth has been attributed to the success of Lilly’s flagship diabetes treatments, Mounjaro and Zepbound. In this period, Mounjaro generated $3.8 billion, marking a remarkable growth of 113% from the previous year, while Zepbound, which received FDA approval in November 2023, accrued $2.3 billion in sales.

Challenges with Clinical Trials

Despite their successes, Lilly has faced challenges in the clinical trial arena. Recently, the company withdrew its application for tirzepatide—the drug serving as the foundation for both Mounjaro and Zepbound—in relation to heart failure with preserved ejection fraction (HFpEF). Dr. Dan Skovronsky, Lilly’s chief scientist, communicated that the FDA required an additional confirmatory clinical trial before considering approval for this indication. This setback echoes challenges faced by competitors; for instance, Novo Nordisk similarly withdrew its HFpEF application for Wegovy, which is a rival of Zepbound in the obesity market.

Looking Ahead: Revenue Forecast

As Eli Lilly focuses on maintaining its growth trajectory, the company is reaffirming its revenue guidance for the year, projecting total sales between $58 billion and $61 billion for 2025. However, the forecast is contingent on the prevailing trade environment as of May 1, 2025, and does not incorporate the potential implications of any tariff-related policy shifts.

As tariffs remain a contentious topic in the pharmaceutical industry, biopharma executives continue to emphasize the importance of tax reform as a more effective and sustainable approach to nurturing domestic manufacturing and investment.