Regeneron's $3B Deal with Fujifilm Diosynth Highlights Industry's Onshoring Push

In a significant move that underscores the pharmaceutical industry's growing focus on domestic manufacturing, Regeneron Pharmaceuticals has announced a $3 billion, 10-year agreement with Fujifilm Diosynth Biotechnologies. This partnership aims to bolster Regeneron's U.S.-based production capabilities for commercial biologics, nearly doubling the company's existing domestic manufacturing capacity.

Strategic Manufacturing Partnership

The collaboration between Regeneron and Fujifilm Diosynth will center on the latter's extensive campus in Holly Springs, North Carolina. Regeneron will secure additional production space at this facility, which has already seen investments of over $3.2 billion from Fujifilm. The technology transfer process is set to begin immediately, with initial operations expected to commence later this year.

Regeneron's CEO, Leonard Schleifer, M.D., Ph.D., emphasized the company's commitment to domestic production, stating, "Regeneron is an American success story." He highlighted that more than 80% of the drugmaker's workforce and assets are located in the United States, and all FDA-approved Regeneron medicines were invented in its New York laboratories.

Industry-Wide Onshoring Trend

Regeneron's move is part of a broader trend in the pharmaceutical industry, with many companies ramping up their U.S. manufacturing presence. This shift is largely driven by the potential implementation of sector-specific tariffs on pharmaceutical imports under a second Trump administration.

Several major players in the industry have announced significant investments in U.S. manufacturing and R&D:

• Roche has pledged $50 billion in U.S. investments over five years, including expansions at existing facilities and a new 900,000-square-foot production hub for next-generation weight loss drugs.
• Novartis has committed $23 billion to build and expand 10 U.S. facilities over the next five years.
• Eli Lilly plans to invest $27 billion in four new local production plants this year.
• Johnson & Johnson has earmarked $55 billion for near-term U.S. spending, including the construction of three new manufacturing sites and expansion of existing facilities.

Regulatory and Political Landscape

The surge in domestic pharmaceutical manufacturing investments comes against the backdrop of potential trade policy changes. While pharmaceuticals were exempted from recent "reciprocal" tariffs, Commerce Secretary Howard Lutnick has indicated that drug-specific duties may be implemented "in the next month or two."

Additionally, the Trump administration has initiated a Section 232 investigation into pharmaceutical imports, which could lead to trade restrictions if national security threats are identified. This investigation, backed by the Trade Expansion Act of 1962, has further motivated companies to strengthen their U.S. manufacturing presence.

As the pharmaceutical industry continues to adapt to evolving trade policies and economic pressures, the trend towards increased domestic production is likely to persist, reshaping the landscape of drug manufacturing in the United States.