Bayer is investing $2.2 billion in a new pharmaceutical factory in Ohio

The pharmaceutical company wants to produce cancer, heart and kidney drugs in Ohio in the future. Bayer is thus strengthening its US business - in the middle of Trump's fight against high drug prices.

View of Bayer's US headquarters in Whippany, New Jersey. Photo: Corbis via Getty Images

New York, Munich. Bayer is building a new pharmaceutical factory in New Albany, Ohio, for $2.2 billion. The Leverkusen-based company announced this on Friday evening. The pharmaceutical and agricultural group initially wants to produce cancer, cardiovascular and kidney drugs on a campus there and create around 600 new jobs.

The project is one of Bayer's largest single investments in a US pharmaceutical plant. The location will also be part of a new cooperation network in the USA that combines manufacturing with academic research, according to a statement.

“The expansion is another important step in expanding our pharmaceutical business and meeting the demand of our customers and patients in the USA and beyond,” explained US boss Sebastian Guth, who is also operational head of Bayer’s pharmaceutical division. At the same time, the USA is the fastest growing pharmaceutical market for Bayer, said Guth.

Decline in older blockbuster drugs

The division already generates around 35 percent of its sales in North America. By the end of the decade, US sales of prescription drugs are expected to at least double, Guth told Handelsblatt last December. According to Bayer, more than seven billion dollars have already flowed into research, development and production in the pharmaceutical division in the past five years.

The pace is also a necessity. Bayer needs to offset the decline in older blockbuster drugs, which is weighing on sales. When it comes to the anticoagulant Xarelto and the eye medication Eylea, the company is faced with generics and biosimilars, i.e. imitators of biological drugs. Bayer therefore wants to strengthen its product pipeline and is promising growth in the mid-single-digit percentage range for the pharmaceutical division again from 2027.

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Bayer has high hopes for Nubeqa. The drug is used to treat prostate cancer, and the DAX group expects it to generate annual sales of several billion euros. Other growth drivers are Kerendia for chronic kidney disease in diabetes and heart failure, the anticoagulant Asundexian, which is in the approval process in important markets, and Lynkuet for hot flashes during menopause.

Future success in the US market may also depend on the high prices there. This is exactly what the current US government is shaking up: Trump had already issued a presidential decree in May last year demanding that Americans pay no more for medicines than patients in comparable industrialized countries - the principle of the “Most Favored Nation” (MFN).

The investment in Ohio is also a bet on the time after the administration of US President Donald Trump. The first module for the production of active ingredients is expected to begin operations in 2031. A second module for finished medicinal products is scheduled to follow in 2034.

Bayer's US boss Sebastian Guth: Bet on the time after the administration of US President Donald Trump. Photo: Bayer

The US accounts for less than five percent of the world's population, but finances around three quarters of global pharmaceutical profits, the Trump administration explains the price reduction initiative. In fact, the gap is large: based on list prices, according to studies, drugs in the USA cost around three to four times as much as in other industrialized countries.

Since the presidential order, 26 manufacturers have entered into voluntary pricing agreements with the White House, which the White House says cover 89 percent of the market for brand-name drugs. However, how much the agreements actually bring is controversial. The contracts are secret; for medications that have already been introduced, the price commitments apply primarily to the state health program Medicaid and to self-payers.

Tariffs capped by EU deal

Those who have signed will remain exempt from customs duties on patent-protected imported medicines until January 2029, subject to certain conditions. They have been in effect for numerous manufacturers since the end of September and can be up to 100 percent.

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Bayer is not yet one of the signatories. The management is relaxed about the tariffs themselves anyway. According to the trade agreement with Washington, a rate of 15 percent applies to goods from the EU; Bayer does not expect a significant impact on this year's forecast. The question of price is more delicate. Because of MFN's policy, it said it was reviewing its own pricing and market launch strategies when the half-year figures were presented in August.

Pharma boss Stefan Oelrich became more specific: Bayer initially wants to price the anticoagulant Asundexian, which is about to be launched on the market, in the USA and China, with Europe to follow. It has already been made clear to those countries that serve as a benchmark for the US government that comparable prices are necessary there. Otherwise, market access there could be delayed.

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