Final 12 months noticed the biggest fall in US contract manufacturing (CM) offers for FDA-approved medicine in 5 years. Regardless of the very best import tariffs in fashionable historical past on EU prescription drugs, GlobalData’s Offers database revealed that biopharma firms, together with US-based companies, are more and more outsourcing drug manufacturing for the US market to European-based services somewhat than turning to home suppliers.
The graph beneath exhibits a gradual decline in US-based and Europe-based CM offers for FDA-approved medicine between 2020 and 2023, which was largely attributed to the rise and subsequent fall of the Covid-19 vaccine emergency demand over that interval. Between 2023 and 2024, deal quantity will increase in each the US and Europe because the trade recovers post-pandemic. In 2025, nevertheless, the hole between US- and Europe-based CM offers was the widest but, with Europe recording greater than triple the US deal quantity. Germany, which is presently Europe’s main drug producer, in accordance with GlobalData’s Medicine by Producer database, accounted for 12 of these offers, averaging at 9 CM offers per 12 months for US drug manufacturing over the six-year interval.
Undeterred by the 15% import tariffs on EU prescription drugs, carried out final 12 months to incentivise home manufacturing, biopharma firms look like more and more turning to CM in Europe. In 2025, 9 out of the 14 US-based pharma firms that outsourced manufacturing (together with Johnson & Johnson and Vertex Prescription drugs) invested in a complete of 13 Europe-based manufacturing offers. By comparability, lower than half of those firms invested in US-based services, signing a complete of eight CM offers.
Corporations are additionally following this development with their in-house manufacturing services. Earlier this 12 months, Novo Nordisk and Eli Lilly introduced investments of $501m and $3bn, respectively, to broaden their in-house European manufacturing websites. With the current FDA approval and success of Novo’s Wegovy capsule, which is presently the primary and solely oral glucagon-like peptide-1 (GLP1) receptor agonist obtainable within the Western market, Novo is planning to broaden its tabletting facility in Eire to satisfy the present and future US market demand. A diversified world provide chain, significantly amid the present unpredictability of the US political local weather, will enable biopharma firms to minimise the related dangers of sudden, catastrophic disruptions to manufacturing.
The shift of CM offers for FDA-approved medicine towards Europe highlights the restricted impression that European import tariffs have needed to sway biopharma firms away from European-based CM and in the direction of the US. The area, with Germany specifically, is rising to be a lovely and well-established hub for pharmaceutical manufacturing for the US market. Such a shift could hinder the present US administration’s plans to reshore home CM.
