Last year saw the largest fall in US contract manufacturing (CM) deals for FDA-approved drugs in five years. Despite the highest import tariffs in modern history on EU pharmaceuticals, GlobalData’s Deals database revealed that biopharma companies, including US-based firms, are increasingly outsourcing drug manufacturing for the US market to European-based facilities rather than turning to domestic suppliers.
The graph below shows a gradual decline in US-based and Europe-based CM deals for FDA-approved drugs between 2020 and 2023, which was largely attributed to the rise and subsequent fall of the Covid-19 vaccine emergency demand over that period. Between 2023 and 2024, deal volume increases in both the US and Europe as the industry recovers post-pandemic. In 2025, however, the gap between US- and Europe-based CM deals was the widest yet, with Europe recording more than triple the US deal volume. Germany, which is currently Europe’s leading drug manufacturer, according to GlobalData’s Drugs by Manufacturer database, accounted for 12 of those deals, averaging at nine CM deals per year for US drug manufacturing over the six-year period.
Undeterred by the 15% import tariffs on EU pharmaceuticals, implemented last year to incentivise domestic manufacturing, biopharma companies appear to be increasingly turning to CM in Europe. In 2025, nine out of the 14 US-based pharma companies that outsourced manufacturing (including Johnson & Johnson and Vertex Pharmaceuticals) invested in a total of 13 Europe-based manufacturing deals. By comparison, less than half of these companies invested in US-based facilities, signing a total of eight CM deals.
Companies are also following this trend with their in-house manufacturing facilities. Earlier this year, Novo Nordisk and Eli Lilly announced investments of $501m and $3bn, respectively, to expand their in-house European manufacturing sites. With the recent FDA approval and success of Novo’s Wegovy pill, which is currently the first and only oral glucagon-like peptide-1 (GLP1) receptor agonist available in the Western market, Novo is planning to expand its tabletting facility in Ireland to meet the current and future US market demand. A diversified global supply chain, particularly amid the current unpredictability of the US political climate, will allow biopharma companies to minimise the associated risks of sudden, catastrophic disruptions to production.
The shift of CM deals for FDA-approved drugs toward Europe highlights the limited impact that European import tariffs have had to sway biopharma companies away from European-based CM and towards the US. The region, with Germany in particular, is growing to be an attractive and well-established hub for pharmaceutical manufacturing for the US market. Such a shift may hinder the current US administration’s plans to reshore domestic CM.
