US pharmaceutical giant Eli Lilly plans to significantly scale back a planned multibillion-dollar investment in a new production facility in western Germany, blaming the government's planned health care reforms for the move.
The company said it would reduce the remaining scope of the project in the town of Alzey by 50% compared with its original plans, citing the direction of health policy in Germany.
Eli Lilly had previously intended to invest $2.5 billion in the site, one of the largest pharmaceutical investments in Germany in recent years.
Chief executive Dave Ricks described the planned reforms as a "terrible signal" in comments to the Handelsblatt newspaper.
"Germany will fall to the bottom of European markets when it comes to supporting our industry," he said.
The reforms include higher rebates that pharmaceutical companies will be required to grant statutory health insurers as part of the government's efforts to curb rising health care costs.
Construction of the Alzey facility is already well advanced. The shell of the production plant is reportedly nearly complete, interior work is progressing and around 300 employees have already been hired.
The project announced in 2023 had originally been expected to create up to 1,000 jobs.
Going forward, only the "minimum scope of the high-tech production site" will be completed, Ricks said. The facility is still scheduled to begin operations in 2027, albeit with reduced capacity.
Eli Lilly's announcement comes as Germany's pharmaceutical industry warns that planned health care savings measures could undermine the country's attractiveness as an investment destination.
