Eli Lilly invests $6.5 billion to expand production capacity for weight loss drugs by building a factory in Texas

Eli Lilly announced on Tuesday that it will invest $6.5 billion to build a manufacturing plant in Houston, Texas, to expand the production capacity of its "small molecule drug" orforglipron product line, which includes the highly anticipated experimental weight loss pill.

The media reported that this is the second of a series of recent domestic investment plans by Eli Lilly. In February of this year, Eli Lilly announced it would invest at least $27 billion to build four manufacturing plants in the United States, an expansion based on the $23 billion it has already invested since 2020.

Eli Lilly stated that it will announce the remaining two U.S. plant locations within this year and expects all four new plants to be operational within the next five years. Eli Lilly's stock price fell 1.06% on Tuesday, closing at $746.98.

Aiming to Accelerate Production Speed

Analysts believe that Eli Lilly's move aims to accelerate the production speed of its oral weight loss drug orforglipron, striving to bring it to market ahead of competitors and maintain a leading position in the rapidly growing GLP-1 drug market. The company expects to submit a marketing application for orforglipron to drug regulatory agencies worldwide by the end of this year for the treatment of obesity. Previously, both Eli Lilly and Novo Nordisk faced capacity shortages due to a surge in demand for weekly injectable weight loss drugs in the United States.

Orforglipron is designed to mimic the appetite-suppressing effects of the GLP-1 hormone in Eli Lilly's best-selling drug Zepbound. According to a report released by Jefferies this month, the drug is expected to generate approximately $25 billion in annual revenue for Eli Lilly at peak sales.

Data shows that in a late-stage clinical trial, patients lost an average of 12.4% of their weight after taking orforglipron daily. Eli Lilly plans to submit the regulatory approval application for the drug later this year. Wall Street analysts indicate that the drug is highly likely to enter the expedited approval pathway recently launched by the U.S. Food and Drug Administration (FDA), with the entire process potentially taking only one to two months.

Eli Lilly CEO David Ricks stated in a media interview that although orforglipron will also be produced at the Indiana plant, the Houston facility will become a key production center for the drug. He said, "This site will primarily be used for the production of orforglipron and some drug precursor components," adding that this will enhance the company's capacity for large-scale production of the drug.

"Our new plant in Houston will strengthen Eli Lilly's ability to produce orforglipron at scale, and once approved, the drug is expected to provide millions of patients worldwide with an oral obesity and type 2 diabetes treatment option that does not require dietary or fluid restrictions."

Ricks also mentioned to the media that part of the reason for choosing Texas as the plant location is due to the local abundance of chemical engineering and chemistry talent, as well as ample technical workers and construction support

American Pharmaceutical Companies Expand Domestic Production Capacity

Recently, as U.S. President Trump threatened to impose tariffs on imported drugs, American pharmaceutical companies have accelerated their expansion of production capacity in the United States. Trump stated that these tariffs would encourage companies to relocate production back to the U.S. to address the significant shrinkage of the domestic pharmaceutical industry over the past decade. Earlier this year, Eli Lilly announced plans to expand its drug production capacity in the U.S., and is currently constructing another factory in Virginia.

In addition, large pharmaceutical companies, including Johnson & Johnson, Roche, and Sanofi, have committed to investing hundreds of billions of dollars in U.S. production lines over the next few years.

In a statement on Tuesday, Eli Lilly indicated that the new plant in Houston will focus on producing orforglipron, as well as the company's small molecule drug product lines targeting various disease areas such as cardiometabolic health, oncology, immunology, and neuroscience. Small molecule drugs typically come in pill form, making them more convenient for patients compared to injectable drugs, and they are also simpler and lower cost to produce at scale.

According to reports, the new Eli Lilly plant is expected to create 615 formal jobs in the Greater Houston area, including high-skilled engineers, scientists, operations personnel, and laboratory technicians, and will also generate 4,000 construction-related jobs.

In addition to the upcoming factory, Eli Lilly has production bases in Indiana, North Carolina, and Wisconsin, and internationally has factories in Germany and Ireland