Eli Lilly invests $6.5 billion to build a factory in Texas to expand weight loss drug production.

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Eli Lilly announced on Tuesday that it will invest $6.5 billion to build a new manufacturing plant in Houston, Texas, to expand its “small molecule drug” orforglipron product line, including the much-anticipated experimental weight-loss pill.

Media reports say this is the second of a series of recent U.S. investment plans by Lilly. In February this year, Lilly announced it would invest at least $27 billion to build four new manufacturing plants in the United States, an expansion on top of the $23 billion it has already spent since 2020.

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. Lilly’s stock closed down 1.06% on Tuesday at $746.98.

Aiming to Accelerate Production Speed

Analysts believe this move by Lilly is intended to accelerate the production pace of its oral weight-loss drug orforglipron in an effort to beat competitors to market and maintain its leading position in the rapidly growing GLP-1 class drug market. The company expects to submit marketing applications for orforglipron as an obesity treatment to drug regulators around the world before the end of this year. Previously, both Lilly and Novo Nordisk faced capacity shortages in the United States due to surging demand for their weekly injectable weight-loss drugs.

Orforglipron aims to mimic the appetite-suppressing effects of the GLP-1 hormone in Lilly’s blockbuster drug Zepbound. According to a report published by Jefferies this month, this drug could bring Lilly about $25 billion in annual revenue at its sales peak.

Data shows that in a late-stage clinical trial, patients who took orforglipron daily lost an average of 12.4% of their body weight. Lilly plans to submit the drug’s regulatory approval application later this year. Wall Street analysts said the drug is very likely to enter the U.S. Food and Drug Administration (FDA)'s recently launched fast-track review channel, with the entire process possibly taking only one to two months.

Lilly CEO David Ricks said in a media interview that although orforglipron will also be produced at the Indiana plant, the Houston plant will become an important manufacturing hub for the drug. He said: “This facility will mainly be used to produce orforglipron and some precursor ingredients for other drugs,” adding that it will enhance the company’s ability to mass produce this particular drug.

“Our new Houston plant will enhance Lilly’s ability to produce orforglipron at scale. Once approved, this drug is expected to provide tens of millions of patients worldwide with an oral obesity and type 2 diabetes treatment option that does not require restrictions on eating or drinking.”

Ricks also told the media that one reason for choosing Texas as a plant location is the region’s abundance of chemical engineering and chemistry talents, as well as sufficient skilled workers and construction support.

U.S. Pharmaceutical Companies Expanding Domestic Manufacturing Capacity

Recently, as U.S. President Trump threatened to impose tariffs on imported drugs, American pharmaceutical companies have been accelerating the expansion of their manufacturing capacity within the United States. Trump said these tariffs will encourage companies to move production back to the U.S., addressing the drastic contraction of the domestic pharmaceutical industry over the past decade. Earlier this year, Lilly announced that it would expand its drug production capacity in the U.S. and is currently building another plant in Virginia.

In addition, major pharmaceutical companies including Johnson & Johnson, Roche, and Sanofi have pledged to invest hundreds of billions of dollars in their U.S. production lines in the coming years.

In Tuesday’s announcement, Lilly stated that the new Houston plant will focus on producing orforglipron as well as other small molecule drugs in the company’s product portfolio covering cardiometabolic health, oncology, immunology, neuroscience, and other disease areas. Small molecule drugs are usually in pill form, making them easier for patients to take compared to injectable drugs, and are also simpler and less expensive to mass-produce.

According to the introduction, Lilly’s new plant is expected to create 615 permanent jobs in the Greater Houston area, including highly skilled engineers, scientists, operations staff, and laboratory technicians, and will also generate 4,000 construction-related jobs.

In addition to the upcoming facility, Lilly already has manufacturing bases in Indiana, North Carolina, and Wisconsin in the United States, and internationally in Germany and Ireland.

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