Lilly builds $2. 5 billion pharmaceutical plant in Germany amid obesity drug boom

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By Klaus Lauer and Ludwig Burger

BERLIN (Reuters) – Eli Lilly will build its first factory in Germany for 2. 3 billion euros ($2. 5 billion) in the western city of Alzey, the U. S. drugmaker said on Friday, as the industry struggles to meet demand for new remedies for diabetes and obesity.

The investment, reported by Reuters on Wednesday and Thursday, will help boost production of diabetes and obesity drugs, including Mounjaro, and injectable pens to administer them, the U. S. organization said.

“The German workforce will play a critical role in bolstering Lilly’s incretin source when the new site becomes operational from 2027,” Lilly said in a statement Friday.

Incretins are based on peptides, such as Mounjaro, that mimic gut hormones to suppress appetite and stimulate insulin secretion.

The diabetes drug Mounjaro, which has been used off-label for weight loss, was approved last week for further use in the United States.

Eli Lilly and Danish rival Novo Nordisk are leading a race to capture an estimated $100 billion global market for obesity treatments. Novo said the industry is far from generating enough to meet demand.

The plans to create Lilly’s first primary production complex in Germany come at a time when drugmakers are vulnerable to political pressure to make must-have fitness products closer to the markets they serve after the coronavirus pandemic has exposed the vulnerability of global supply chains.

“This investment encourages the government in its efforts to make Germany a pharmaceutical hub,” Health Minister Karl Lauterbach told a press convention in Berlin.

“By doing so, we will ensure immediate access to new solution features and reduce reliance on fragile chains of origin,” he added.

The US organization said a professional workforce and existing infrastructure were among the points to consider in location selection, as well as the opportunity to shape a manufacturing cluster with a Lilly plant in Fegersheim, France.

In addition to having obtained U. S. approval. Mounjaro will most likely also be approved for weight loss in the U. S. after marketing authorization from the European Union’s drug regulator.

However, in Germany, the law prohibits public health insurance from covering weight-loss drugs. Non-diabetic patients who have obtained a weight-loss prescription will likely have to pay for Mounjaro out of their own pocket.

Health Minister Lauterbach told a news conference on Friday that a revision of these rules is not currently on the agenda.

Lilly said it has announced investments of more than $11 billion in production over the past three years.

According to its third-quarter report, the company had set aside more than $8 billion for ongoing investments in Indiana, North Carolina, and Limerick, Ireland, over the next few years.

The investment comes at a time when Big Pharma has expressed strong opposition to the European Union’s plans to shorten the coverage period for corporations before generics can enter the market, from 10 to 8 years.

Lilly’s main production facilities outside of its U. S. home market are located in Ireland, France, Spain, Italy and China.

The American company, which has been present in Germany since 1960, now employs 1,000 people in areas such as development, sales, marketing and administration.

The new Alzey will employ up to 1,000 highly professional engineers, technicians and scientists, Lilly said.

(Additional reporting by Patrick Wingrove; editing by Matthias Williams, Jason Neely and David Evans)

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