Generic drugmakers resist move to U.S

Investment Analysis Clubs Macro Economic Trends and Risks
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Generic Drugmakers Resist Trump’s Calls for More U.S. Manufacturing

Companies say further domestic investment is too risky in such a low-margin and unpredictable business

By Jared S. Hopkins, The Wall Street Journal, June 17, 2025

Key Points

  • Generic drugmakers resist calls to increase U.S. manufacturing due to low margins and uncertainty.

  • Drugmakers seek clarity on potential pharmaceutical tariffs, warning they lead them to close U.S. plants.

  • Generics firms want government incentives like subsidies to make domestic investment viable.
    …
    Makers of generics—cheaper copies that make up 90% of Americans’ prescription medications—say further domestic investment is too risky in such a low-margin and unpredictable business, unless the government helps to steady the sector…

The stance from drugmakers Sandoz, Teva Pharmaceutical Industries and other generic drug manufacturers is striking in comparison to their brand-name rivals. Bristol Myers Squibb, Eli Lilly, Roche and others have promised to invest more than $250 billion in domestic manufacturing, jobs and other functions as tariffs targeting their products loom.

More U.S. investment by brand-name drugmakers, however, won’t address issues such as curbing shortages of drugs or supplying essential medicines, which largely involve generic drugs that are made overseas, according to supply-chain experts. Instead it will spur production of expensive medicines already made in America such as cell therapies or biologic cancer drugs, which make up more than 80% of the country’s drug expenditure.…

Generic drug manufacturers compete largely on price and generate sales on volume. Drug-price negotiations by pharmacy-benefit managers and group-purchasing organizations, who negotiate for employers and hospitals, respectively, push prices down further. … [end quote]

These numbers show the problem of drug pricing in America. The manufacturers of generics have lower profit margins and provide 90% of the prescriptions. It’s counterproductive to put tariffs on them since they won’t build factories in America where labor and regulations are more stringent and government policies are unpredictable. Raising tariffs will only increase prices and may cause shortages. Some antibiotics and other generic prescriptions (with insurance) are literally less expensive than a packet of M&Ms. There’s no incentive for manufacturers.

The focus should be on the pricing of the expensive on-patent drugs. But Big Pharma claims (with good reason) that high prices are needed to finance research and clinical trials that can cost $1 billion.

Wendy

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Once many were produced in Puerto Rico when tax incentives were provided. But Congress cancelled the incentives and most left.

In highly competitive business it’s difficult to justify new investment. You seek return on investment w new equipment competing with existing fully depreciated equipment and low labor and regulatory costs.

Another way is FDA inspection of foreign plants. Many do not comply w requirements. But inspection are rarely unannounced. Rules are easily broken. A competitive advantage.

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As an HIV infected man in my late 50’s into 60’s of the pre-Obama medical insurance environment, I became utterly unwilling to pay USA health insurer fees or most USA drug prices, and became an expert on importing and sometimes smuggling quality foreign medications. Informal testing networks sprang up on the nascent internet, and although it was not easy I found it workable. I monitored by viral load monthly and the drugs I bought (mostly made in India and routed through Canada) saved my life.

My extreme hatred of the USA medical industry continues from those days. I had many friends die because they were unwilling to trust foreign sourced drugs.

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Dude, you have so many stories you need to write a book.

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