A new pharma factory shows how hard it could be for drugmakers to outrun Trump's tariffs

And it shows how difficult it would be for drugmakers to quickly increase duction in the U.S., even with a possible grace period that Trump has floated. "This is a pharmaceutical manufacturing facility, so everything needs to be safe to put into patients," said Fujifilm Bionologies CEO Lars Petersen. "Everything requires an extreme high nology level, very high cleanability

Everything needs to be documented, everything needs to be apved later on by the authorities

So that cess is just extremely tedious."As companies move to set up more U.S. manufacturing, tariffs may not end up being as big a blem for them as previously thought

The Trump administration on Thursday clarified that under its trade framework with the European Union, pharmaceuticals coming from the bloc would be subject to only a 15% tariff, not a higher one the administration may implement on medicines more generally.Fujifilm's timeline for opening the Holly Springs site is in line with the industry average of between three and five years to start up a new plant, depending on the complexity, according to Gabriela de Almeida, managing director and partner at Boston Consulting Group

It helps that the new facility is identical to the one Fujifilm operates in Denmark.The company decided to start replicating its plants to speed up the cess of designing and building them

The more Fujifilm does that, the faster it can open new sites and customers can start duction there, Petersen said

Even once the first tenants move in this fall, they'll need the U.S

Food and Drug Administration to sign off before they can use the ducts that are made here.watch now2:5202:52Here's what's inside Fujifilm's $3 billion drug plant in North CarolinaMoney MoversBiologics are particularly complex drugs to make because they rely on living cells to duce the exact same thing, every single time, said Regeneron CEO Len Schleifer. "It's very expensive, very complicated and takes a very long time," Schleifer said

The companies won't say exactly which drugs will be made at the facility, but it is designed to duce monoclonal antibodies.It takes almost two months to duce one batch of bulk drug substance

The cess involves growing cells that are making a desired tein, purifying the resulting material then preparing it to go to the next step in the complex pharmaceutical supply chain

Opening a valve at the wrong time and letting just one wrong molecule inside could mean an entire batch is lost, Fujifilm's Petersen said.Why drugmakers are boosting U.S. manufacturingFUJIFILM Diosynth Bionologies in Holly Springs, North Carolina.Courtesy: FUJIFILM Diosynth BionologiesRegeneron, one of the largest ducers of biologic drugs in the world, signed a $3 billion, 10-year contract with Fujifilm for space at the new Holly Springs site, doubling its U.S. manufacturing capacity

By the time Regeneron was looking to increase duction, Fujifilm had a head start of multiple years in constructing the facility, so it made sense for the bio company to secure space there instead of building from scratch, Schleifer said.Regeneron declined to specify which drugs it will duce in Holly Springs

The company manufactures its medicines at a mix of locations, including its own factories in the U.S. and Ireland, according to regulatory filings

Regeneron is also in the cess of opening a new plant in New York, and it acquired another perty in that state that it may use for manufacturing

It's one of a number of biopharmaceutical companies that have recently announced plans to increase U.S. duction of pharmaceuticals as Trump pressures them to make more of their drugs domestically.Drugmakers were already ramping up their U.S. manufacturing capabilities before Trump started threatening tariffs specifically on pharmaceuticals, which he exempted from sweeping levies on dozens of countries this spring

The number of U.S. biopharmaceutical manufacturing facilities in the country has increased more than 50% since 2018, according to data from the Pharmaceutical Re and Manufacturers of America, the industry's main lobbying group

Johnson & Johnson Chief Financial Officer Joe Wolk said changes in U.S. tax policy made the United States a more attractive place to duce drugs

Those moves will allow J&J to supply all of its advanced medicines from the U.S., Wolk said, while declining to name which drugs will be made at Fujifilm's facility."It really comes down to good tax policy," Wolk said. "If you think the tax policy that's now in place at the United States at a 21% [corporate] tax rate, that puts us right in the middle of the pack," allowing J&J to tap into the infrastructure that's emerged in the U.S. since the 2017 Tax Cuts and Jobs Act, he said.North Carolina has benefited from the boom

Life sciences companies have announced $28 billion of investments in the state since 2016, with a record $10.8 billion pledged last year, according to the North Carolina Bionology Center.Down the street from Fujifilm's new facility in Holly Springs, Amgen is building a $1 billion drug substance manufacturing plant, ing another it opened there in January

Genen will break ground later this month on a $700 million fill-finish facility, where injectable drugs are packaged into containers vials."It's talent," said Laura Rowley, vice president of life science economic development at the North Carolina Bionology Center, what's driving companies to the state. "It is being here amongst their peers, where there is opportunity still for companies to shine, because we do have that spirit of working together."Playing catch-upFILE PHOTO: A view shows the Fujifilm Diosynth Bionologies's facilities in Stockton-on-Tees, Britain January 29, 2021

Lee Smith | ReutersBiopharma companies are moving to the U.S. to make innovative ducts with high margins that can withstand the higher cost, BCG's Almeida said

But catching up will take time.Only 18% of generic and branded drugs originate in the U.S., excluding Puerto Rico, according to an analysis of 2024 Food and Drug Administration pharmaceutical import data by the U.S

Pharmacopeia, an organization that aims to imve the drug supply chain

The country of origin refers to the country where the last major manufacturing step occurred, typically where the active pharmaceutical ingredient was duced.For branded injectable medicines – the ones that will be made at Fujifilm's Holly Springs facility – Europe is the dominant source, with almost half originating there.Securing manufacturing capacity in the U.S. with a contractor Fujifilm is one tweak companies can make to reduce their potential tariff exposure in the short term, said Greg Graves, a senior partner in McKinsey's life sciences practice

Signing on with an external site could be quicker and less expensive than building a new plant.Simply moving manufacturing to an existing space can take two to three years, BCG's Almeida said

Called a transfer, the cess of ducing a drug in a new location requires planning, testing to ve the new cess works the same, then seeking apval from regulators

Regardless, every company is trying to figure out how to prepare for tariffs, Almeida said

Graves and fellow McKinsey senior partner Parag Patel are seeing the same among their clients

However, they said, no one is preparing for a rate as high as 250%, a possibility Trump raised earlier this month. "I haven't come across any organization that's going that big in their planning because I think they all understand that if this happens, it would fundamentally change the way we're organized and running, and therefore we'd have to have a different conversation," Patel said

At Fujifilm's Holly Springs site, the whole point is to give customers flexibility, Petersen said

There's room to double the entire site, a decision the company will make if the demand warrants it

Should Fujifilm decide to move forward, Petersen thinks it can build that in just three years this time, since the company's getting faster with each facility clone it creates."There's no question that when you have these discussions tariffs or Covid or any other disruption to the supply chain, it creates a need for flexibility," Petersen said. "This facility was built before some of these discussions, but it's definitely built to handle supply chain ability should demand go up or down."