Merck to spend $1 billion on new factory to make US supplies of blockbuster drug
Merck & Co. will grow its U.S. manufacturing footprint with a $1 billion plant in Delaware, becoming the latest drugmaker to invest in the U.S. as tariffs targeting the industry loom.
The facility's products will include biologic drugs and a new, easier-to-use version of Keytruda, the company's blockbuster cancer drug. The plant marks Merck's first in-house manufacturing site in the U.S. to make Keytruda, and will ensure American patients get the drug made domestically.
'It is really a strategy to make sure we can source the U.S. needs from U.S. sites," Merck Chief Executive Rob Davis said in an interview. 'As you look at what the current administration is doing and what President Trump is trying to achieve, this is very much aligned with that."
Merck's biggest exposure to tariffs is Keytruda, which is the world's top-selling pharmaceutical, and is approved for treating lung cancer, melanoma and other tumors. Keytruda accounts for roughly half of the company's revenue, and last year generated $29.5 billion in worldwide sales.
The drug is manufactured by the company outside the U.S. in places such as Ireland and by domestic contract manufacturers. Merck has said it has built up enough U.S. supply for 2025 and is working on expanding manufacturing for the future. The company recently projected tariffs implemented to date will cost the company $200 million.
The Trump administration is weighing whether to implement tariffs targeting pharmaceutical imports, and analysts expect they might come next month. Drugmakers have been pushing the administration to delay, or phase them in over time.
As talks of pharmaceutical tariffs have swelled, more drugmakers have made plans to invest in U.S. manufacturing sites. In recent weeks, Johnson & Johnson, Eli Lilly, Roche and AbbVie all pledged billions for domestic manufacturing in the coming years.
The new plant will produce a more convenient-tweaked version of Keytruda given by injection, rather than intravenously. Merck is betting the new version will offset billions of dollars in revenue it could lose after Keytruda's U.S. patents start losing protection in 2028.
Construction on the 470,000-square-foot site in Wilmington, Del., starts Tuesday with drugs set to roll out by 2030, according to Merck. The company estimates the plant will create at least 500 on-site jobs, and roughly 4,000 construction jobs.
Merck is working to manage potential tariffs through inventory management and bolstering manufacturing, Davis said. Merck has already spent $12 billion since 2017 to grow domestic manufacturing and research capabilities, and is investing more than $9 billion over the next four years.
Write to Jared S. Hopkins at jared.hopkins@wsj.com
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