Eli Lilly CEO Addresses National Security Concerns as Pharmaceutical Tariffs Loom

Eli Lilly CEO Dave Ricks spoke out on Thursday regarding the company’s role in addressing national security concerns over the importation of essential medicines, as the U.S. government contemplates imposing tariffs on certain pharmaceutical imports.

The Trump administration has launched a Section 232 investigation to examine the impact of importing pharmaceuticals on national security. This move is widely regarded as a precursor to potential tariffs targeting drugs, particularly older generic medications made in countries such as India and China. These drugs account for a significant portion of the medicines prescribed in the U.S.

In an interview with CNBC, Ricks stated that Eli Lilly is prepared to help the country by increasing domestic production of essential medications. He mentioned that reshoring manufacturing capacity for older medicines, which are vital for hospital care, is a "valid thing" to ensure that the U.S. has a secure supply in the event of an emergency. However, Ricks expressed doubt about tariffs being the most effective solution to these concerns, stating, “Do I think tariffs are the answer to that? I’m not so sure personally.”

Reshoring vs. Tariffs

Ricks' comments came after Eli Lilly reported its first-quarter earnings and 2025 guidance, which did not factor in the potential effects of pharmaceutical tariffs. Despite the uncertainty, Ricks acknowledged that national security concerns surrounding these medications are legitimate. However, he emphasized that Eli Lilly is willing to collaborate with the administration and national security officials to find effective solutions, offering the company’s capabilities to help secure the supply chain.

Older generic drugs, including antibiotics and vasopressors, make up about 90% of the medications prescribed in the U.S. These essential medicines are not only inexpensive but also critical for patient care, especially in hospitals. However, Ricks pointed out that these drugs have been driven out of the U.S. due to cost pressures and other policies, making it more challenging to manufacture them domestically.

Potential Impact on the Generic Drug Market

Health experts have raised concerns that imposing tariffs on generic drugs could have unintended consequences. Due to the lower profit margins on generics, some drugmakers may be forced to leave the U.S. market, exacerbating shortages of essential medications, such as sterile injectable drugs commonly used in hospitals.

Pharmaceutical Industry Shifts to U.S. Manufacturing

Amid the uncertainty over tariffs, Eli Lilly, along with other pharmaceutical companies, has already taken steps to invest in domestic manufacturing. In February, Eli Lilly announced plans to invest at least $27 billion to build four new production sites in the U.S. Ricks stated that the threat of tariffs has already prompted the industry to reshore critical supply chains in sectors like pharmaceuticals, suggesting that tariffs may not be necessary.

Ricks also voiced support for permanent tax reductions for domestic production, echoing a sentiment expressed by Pfizer CEO Albert Bourla earlier this week. Lower tax rates, Ricks said, could incentivize more pharmaceutical companies to return manufacturing to the U.S., reducing the need for tariffs.

As the pharmaceutical industry navigates this evolving situation, Ricks remains optimistic that reshoring and incentives for domestic production can address national security concerns without relying on tariffs.