AbbVie has committed to investing more than $10 billion in its U.S. manufacturing operations over the next 10 years to support volume growth and expansion into new areas such as obesity, according to CEO Rob Michael.
The company’s current manufacturing footprint in the U.S. includes 11 sites with plans to add four new plants to its domestic network, expanding its production of active pharmaceutical ingredients (APIs), drug product, peptides, and devices.
Michael told analysts in AbbVie’s first-quarter 2025 earnings call on Friday that the company’s biggest product Skyrizi is made in the U.S. for the domestic market and that “given our expected volume growth and our expansion into areas like obesity” AbbVie will continue increasing its manufacturing footprint in this country.
When it comes to peptide manufacturing, Michael said that “as we enter into obesity, it makes sense to add that capability — and so that will also be part of our supply chain strategy here.”
AbbVie is the latest large biopharma company to make recent announcements about investments in U.S. manufacturing. Eli Lilly, J&J, and Novartis have all said they are making multi-year investments worth tens of billions of dollars respectively to bolster production in this country.
Last week, Roche announced it will spend $50 billion on U.S. R&D and manufacturing sites over the next five years, funding new and expanded manufacturing facilities in California, Indiana, Massachusetts, Pennsylvania, and a location to be announced.
Tax policy and tariffs
AbbVie CFO Scott Reents said during Friday’s earnings call that while the company continues to invest and grow its U.S. operational footprint, “a more competitive tax policy, building on what was accomplished through 2017 tax reform, will encourage a sustainable shift towards U.S. manufacturing over the long term.”
According to Michael, AbbVie has invested more than $5 billion of capital since tax reform in 2017, including Skyrizi manufacturing capabilities in the U.S.
Michael and Reents are the latest Big Pharma executives to credit the passage of the 2017 Tax Cuts and Jobs Act, legislation passed in 2017 during President Donald Trump’s first administration, for increased investment in U.S. manufacturing. J&J CEO Joaquin Duato earlier this month made the case that tax policy, not tariffs, are the most effective way for Trump in his second term to bring pharmaceutical manufacturing back to this country.
AbbVie raised its adjusted diluted earnings per share (EPS) guidance for the full year 2025. However, it said the guidance is “based on the existing trade environment and does not reflect any trade policy shifts, including pharmaceutical sector tariffs, that could impact AbbVie’s business.”
Michael told analysts that the company is planning to take several steps to mitigate potential effects from tariffs, including a combination of supply chain actions, cost efficiencies and “additional overperformance” from its growth platform. In the near term, AbbVie is looking to take inventory management actions or secure alternate sources of APIs, he said.
“We could also look at cost efficiencies and productivity initiatives as a source of mitigation, which we always do,” according to Michael. “I think what’s more challenging is trying to pass the tariff impacts to our customers, especially with penalties in the government channel and with existing contracts in the commercial setting.”
Foreign exposure
AbbVie has manufacturing locations in Costa Rica, France, Germany, Ireland, Italy, and Singapore. The company’s contract manufacturing network includes 12 locations in the U.S. and Europe, including multiple sites in Ireland.
William Blair analyst Matt Phipps in a note to investors on Friday said that while there may still be an “overhang on the biopharma space” given the potential for pharmaceutical tariffs, his firm is “reassured” that AbbVie “has a global manufacturing footprint and at least the domestic supply of Skyrizi is manufactured within the United States.”
Jefferies analysts in a report late last month highlighted the overseas manufacturing locations of several biopharma companies including AbbVie, specifically calling out their “foreign exposure” in Ireland. The analysts referenced Trump’s threat that tariffs on pharmaceuticals would be coming and his specific focus on Ireland where he complained companies may receive favorable tax treatment.
As a result, the analysts said uncertainty remains as to “what if any focus Trump has on patents and IP domiciled in Ireland and on [companies] benefiting from patents there.”
During Friday’s earnings call, AbbVie executives were asked if the company was considering any changes to IP domiciling. Reents said that IP “has been looked at” in trying to assess the impact of potential tariffs and “we don’t see our profile suggesting any sort of outsized impact for us as a company.” He claimed AbbVie is “relatively in line” with its peers and has a “similar” IP profile.
When it comes to AbbVie’s manufacturing outside the U.S. and tax benefits from those operations, Jefferies analysts found that the company has a benefit to their effective tax rate of -4% due to taxes on foreign earnings. By comparison, Amgen and Biogen potentially have the most foreign exposure to tariffs, according to the analysts.
Amgen has manufacturing operations in Ireland and Singapore, which provide a benefit to their effective tax rate of -6%. The analysts also revealed that Biogen has a benefit to their effective tax rate of -8% due to taxes on foreign earnings.
Vertex Pharmaceuticals, with manufacturing in Boston, Massachusetts, and Gilead Sciences, with most manufacturing in California and its HIV drugs predominantly sold in the U.S., would be “less exposed” on a relative basis, the analysts concluded.
