Pharma Stocks Today: Eli Lilly and the Growing Opposition to Tariffs in the Biopharma Sector
As we move further into 2025, the trade landscape and its impact on the pharmaceutical industry remain a hot topic among biopharma leaders. Recently, significant attention has been drawn to comments from Eli Lilly’s CEO, Dave Ricks, who strongly criticized the Trump administration’s tariff agenda during the company’s first-quarter earnings call.
Eli Lilly’s Investment Commitment Amid Trade Turbulence
Eli Lilly, a major player in the pharmaceutical sector, recently made headlines with a remarkable pledge—$27 billion towards U.S. production and manufacturing capabilities. Ricks emphasized that while the company is committed to increasing domestic investment, he believes that tariffs are not the right strategy to support local industry. “We support the U.S. government’s goals to increase domestic investment,” Ricks stated. “However, we don’t believe tariffs are the right mechanism.” Instead, he advocates for “enhanced” tax incentives and the extension of the Tax Cuts and Jobs Act, which slashed the corporate tax rate from 35% to 21% back in 2017.
Industry-Wide Call for Tax Reform
Ricks is not alone in this sentiment. Johnson & Johnson’s CEO Joaquin Duato and AbbVie’s CFO Scott Reents have also voiced similar concerns regarding tariffs. These industry leaders argue that competitive tax policies could provide a more favorable environment for U.S. manufacturing and investment than sector-specific tariffs, which only create uncertainty and potential harm.
The Trump administration’s tariff strategy aimed to incentivize a return to U.S.-based manufacturing, which resonates with Eli Lilly’s commitment to invest in four new manufacturing facilities in the U.S. Ricks pointed out that these facilities will enable Lilly to produce all its medicines for the U.S. market domestically—a significant step towards bolstering local industry and addressing global supply chain issues.
Financial Performance: A Record Quarter for Eli Lilly
In what has been a strong start to the year, Eli Lilly reported a remarkable 45% year-over-year increase in revenue, amounting to $12.73 billion in the first quarter of 2025. This surge can largely be attributed to standout performances from their GIP/GLP-1 blockbusters, Mounjaro and Zepbound. Mounjaro, approved for Type 2 diabetes, generated an impressive $3.8 billion—an astounding growth of 113% compared to the same period last year. Similarly, Zepbound, which received FDA approval in November 2023, pulled in $2.3 billion for the quarter, up from just $517 million the previous year.
Additionally, Eli Lilly’s breast cancer medication, Verzenio, saw a 10% growth in sales to $1.2 billion. A strategic modification of its commercialization pact for the SGLT2 inhibitor, Jardiance, also contributed with a one-off gain of $370 million.
Challenges Amidst Growth
Despite the impressive financial results, challenges remain. Eli Lilly’s application for tirzepatide—which underpins both Mounjaro and Zepbound—was withdrawn for heart failure with preserved ejection fraction (HFpEF) after discussions with the FDA. The agency advised that additional confirmatory trials would be needed for approval. Ricks expressed his belief in the phase 3 data from the Summit trial, which demonstrated a 38% reduction in adverse HF outcomes compared to placebo. However, the FDA’s requirements for further validation highlight the regulatory hurdles that many biopharma companies are navigating.
This scenario is not unique to Eli Lilly. Competitor Novo Nordisk faced similar challenges with its heart failure application for Wegovy, Zepbound’s primary rival in obesity treatment, leading to its withdrawal last summer.
Outlook for Lilly and the Pharma Industry
As we anticipate the rest of the year, Eli Lilly remains optimistic, sticking to its revenue guidance of between $58 billion and $61 billion for 2025. However, the company noted that this outlook is predicated on the existing trade environment as of May 1, 2025, and does not factor in potential policy shifts or pharmaceutical-specific import tariffs, which could significantly alter operating conditions.
In summary, Eli Lilly’s significant investments and opposition to tariffs underscore a critical juncture in the biopharma industry. Industry leaders recognize that fostering a conducive tax environment rather than imposing trade duties could yield a more favorable outcome for domestic manufacturing and innovation. As we advance into a rapidly evolving market landscape, these dynamics will continue to shape the growth trajectory of pharma stocks and the broader biopharma sector.
