With Germany moving to curb healthcare spending, Eli Lilly and Boehringer Ingelheim have rethought plans to invest in facilities, including a manufacturing plant for GLP-1 drugs.
Eli Lilly and Boehringer Ingelheim are scrapping plans to invest about €2 billion ($2.3 billion) in Germany in response to the country’s plans to cut healthcare spending.
On Wednesday, German newspaper Handelsblatt reported that Boehringer has dropped plans to invest €900 million (just over $1 billion) in Germany. The money was intended for infrastructure expansion from 2027 to 2030, including laboratory buildings. Hours later, Handelsblatt reported that Lilly is pulling back from plans to invest €2.3 billion ($2.68 billion) in a plant in Germany.
Lilly committed to the investment in 2023 and broke ground on the facility the next year. Amid surging demand for its GLP-1 drugs, Lilly identified the injectable product and device manufacturing facility as a way to support supply of Zepbound and Mounjaro. The company had planned to hire 1,000 people at the plant.
Now Lilly CEO Dave Ricks told Handelsblatt that his company is halving its investment in the German plant. Lilly will open the site as planned in 2027 but operate at half the intended capacity and headcount.
Boehringer and Lilly cited planned cuts to healthcare spending in Germany as the driver of their revised investment plans. In April, Germany’s leaders unveiled a draft law intended to save more than €16 billion and control insurance rates. Some of the targeted savings will come from people with health insurance paying more for prescription drugs that are currently subsidized by insurers.
Germany’s leaders pitched the draft law as a necessary response to the widening deficit at state insurers, which is forecast to balloon from €15.3 billion in 2027 to €40.4 billion in 2030. Drugmakers are opposed to the changes, though, with Ricks saying it sends a terrible signal to pharma companies.
Médard Schoenmaeckers, Boehringer’s managing director in Germany, told Handelsblatt he recognized that the country needs to address the health insurance deficit. However, Schoenmaeckers argued the current proposal is a short-sighted cost-cutting measure that clashes with the government’s stated goal of supporting the pharma industry.
The tension between the need to control healthcare spending and a desire to attract pharma investment is present across Europe. As is happening in Germany, the tension has led pharma companies to reduce investment in other countries. Last year in the U.K., Merck abandoned a $1.3 billion project, AstraZeneca paused a $270 million commitment and Sanofi suspended investment over a drug pricing row.
U.K. politicians subsequently addressed some of the industry’s concerns, agreeing to pay 25% more for new medicines as part of a deal with President Donald Trump. Germany is the industry’s latest concern, with Ricks saying the country will be the least supportive nation in Europe if the reforms go through. The changes mean future innovations will not be launched in Germany, Schoenmaeckers said.
Trump’s Most Favored Nation pricing proposals are exacerbating the risk that drugmakers will opt against launching drugs in Europe. With the proposals tying U.S. prices to what companies charge in countries including Germany, drugmakers cannot yield to price pressure from European governments without affecting their biggest market.
