LLY's $5B Virginia Plant Plan: Will U.S. Manufacturing Shift Pay Off?

Eli Lilly and Company LLY announced plans to spend $5 billion to build a massive new manufacturing facility in Virginia as the Trump administration pushes companies to boost production in the United States.

The new site in Virginia is expected to create around 650 high-paying manufacturing jobs and 1,800 construction jobs. At the facility, Lilly plans to make active pharmaceutical ingredients (API) and finished products. Lilly plans to manufacture antibody-drug conjugates or ADCs at the facility. ADCs are mainly used for treating cancer while also being explored for autoimmune diseases. 

In February, Lilly announced plans to invest $27 billion in building four new manufacturing sites in the United States by 2025, bringing its total domestic manufacturing expansion commitments since 2020 to over $50 billion. The new site in Virginia's Goochland County is the first of the four new U.S. manufacturing sites that Lilly committed to build in February. Lilly plans to announce the other three sites later this year and expects medicines manufacturing at these four facilities to begin within five years.

Drugmakers Boosting U.S. Manufacturing Under Trump’s Tariff Threat

Though pharmaceutical imports are currently exempted from reciprocal tariffs, President Trump has threatened to impose heavy tariffs, as high as 250%, on pharmaceutical imports, over time. Trump’s repeated threats to impose tariffs on pharmaceutical imports are aimed at pushing American pharma companies to shift pharmaceutical production back to the United States, primarily from European and Asian countries. This move aims to strengthen U.S. manufacturing and help lower healthcare costs for American citizens. Trump has said that drugmakers have about one to one and a half years to bring production back to the United States before the new tariffs are imposed.

In response to Trump’s tariff threats, most global pharma companies have committed to ramping up U.S. investments to boost domestic production, which had shifted to lower-cost markets outside the United States for years.

Like Lilly, several other drugmakers like J&J JNJ, AstraZeneca AZN, GSK plc GSK, Novartis and Roche have announced tens of billions in U.S. manufacturing and R&D investments.

On Wednesday, London-based GSK announced that it plans to invest $30 billion in research and development and supply chain infrastructure in the United States over the next five years.

In July, AstraZeneca announced that it plans to invest $50 billion in U.S. manufacturing and R&D by 2030. The plan includes a new multi-billion-dollar manufacturing facility to be set up in Virginia.

In March, J&J announced plans to invest more than $55 billion in the United States over the next four years to boost manufacturing, R&D and technology in the country.

In April, Roche committed an investment of $50 billion in the United States over the next five years, creating more than 12,000 new jobs.

In April, Novartis announced plans to invest $23 billion to expand its U.S.-based manufacturing and R&D footprint over the next five years. In May, Sanofi announced plans to invest at least $20 billion in U.S. manufacturing and R&D through 2030

However, drugmakers’ move to shift production to the United States comes with its own set of challenges.

Drug production in the United States is costly, which will drive up drug prices for U.S. consumers. Higher costs will affect drugmakers’ profit margins, and they will try to pass on the cost to consumers. Companies making generic and biosimilar products, which already operate on thin profit margins, will be more severely impacted. Some countries that export drugs or APIs to the United States may avoid the market altogether, which can create supply shortages and hurt the global supply chain.

Drugmakers, hence, may still have to rely on other countries for cheaper drugs and key ingredients. The drugmakers will have to be given many more incentives to move production, such as tax breaks and subsidies.   

LLY’s Stock Price, Valuation and Estimates

Lilly’s stock has declined 1.0% so far this year compared with the industry’s decrease of 0.7%.

From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, LLY’s shares currently trade at 26.63 forward earnings, much higher than 14.69 for the industry. However, LLY’s stock is trading below its 5-year mean of 34.54.

The Zacks Consensus Estimate for 2025 has risen from $21.99 per share to $23.03 per share over the past 60 days, while that for 2026 has risen from $30.79 to $30.95 per share over the same timeframe.

LLY’s Zacks Rank

Lilly has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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