For both Novo Nordisk and Eli Lilly, the unprecedented surge in demand for GLP-1 medicines has been the primary driver of significant investments. Both companies are working around the clock (literally) to expand their production capacities for these medicines, and have announced several large-scale investments for new manufacturing facilities.

Eli Lilly's Commitment to Expansion

Since 2020, Eli Lilly has committed $16 billion towards building new plants in the United States and Europe. The most recent announcement included an upsize to $9 billion for a GLP-1 API plant in Indiana.

Novo Nordisk's Strategic Investments

Similarly, Novo Nordisk has been actively investing in expanding its production capacities. A notable move was its $11 billion agreement with its largest shareholder, Novo Holdings, to acquire three factories that Novo Holdings had obtained through its $16 billion acquisition of the contract manufacturer Catalent.

In June, Novo Nordisk announced a $4.1 billion investment in North Carolina for its third facility in the city of Clayton. This investment adds to a $6 billion commitment in 2023 for an API factory in Denmark, among other investments.

Rising CapEx in Oncology

While investments related to GLP-1 medicines are a significant focus, the increase in capital expenditures is not limited to this segment. The oncology sector is also experiencing a rise in capital expenditures, particularly for the production of the newest generation of medicines, such as antibody-drug conjugates (ADCs) and radioligand therapies (RLTs), which are significantly more complex to manufacture.

RLTs, in particular, pose production challenges due to the need for specialized radioisotopes and facilities, as well as supply chains capable of handling and delivering these medicines safely and quickly to patients (in a matter of days) while they remain effective.

The critical role of robust manufacturing supply chains was highlighted last year when Novartis encountered supply issues with its leading RLT medicine, Pluvicto, leading to a temporary suspension to new patients receiving the drug. In response, Novartis has expanded its Pluvicto production capacity by commissioning a new facility in Indiana this past June.

The Growing Importance of Manufacturing in Biopharma

Taking a broader view, manufacturing, which has often been considered a secondary concern in the biopharmaceutical industry, is witnessing a resurgence in its importance to overall results. This shift underscores the need for additional investment and a focused approach to ensure successful outcomes.