Citing a brisk demand for products and a full pipeline of potential new medicines, Eli Lilly and Co. plans to pour $850 million this year into its U.S. research labs, manufacturing plants and other operations, an increase of about $100 million from last year.
About $85 million of that will go to expand a manufacturing operation at the Lilly Technology Center southwest of downtown that assembles Trulicity injection pens for diabetes patients, the company said Friday.
Lilly CEO Dave Ricks said the total investment will fund projects that are already underway, as well as new projects.
“As we have for our entire 140-year history, we continue to see Indiana and the United States as attractive places to research and make the medicines that we sell around the world,” Ricks said.
The investment is the latest sign that Lilly, one of the largest employers in Indianapolis with about 11,500 jobs, remains bullish on its ability to roll out new products. In the past two years, the drugmaker has launched medicines for cancer, diabetes, psoriasis and other maladies. Company leaders have announced ambitious goals to launch 20 products in 10 years.
The company said the expanded Trulicity plant will be operating using current Lilly manufacturing employees, some of whom might come from elsewhere in the organization. Over the past five years, the company has added about 400 jobs in the city in U.S. diabetes manufacturing.
Ricks said Lilly plans to continue investing in its U.S. facilities, especially if the federal government adopts a “more favorable tax environment.” That would include lowering the U.S. corporate tax rate, adding certain innovation incentives, and an “equitable treatment” of foreign earnings, the company said.
Lilly had $28 billion of unremitted foreign earnings stashed overseas as of Dec. 31.
“We consider these unremitted earnings to be indefinitely invested for continued use in our foreign operations,” the company said in a footnote in its annual report. “Additional tax provisions will be required if these earnings are repatriated in the future to the U.S.”
Ricks made his comments at a press conference in front of the technology center, where a bright red banner draped across the building at least 30 feet high proclaimed “Lilly invested in America.”
“For more than 140 years, Lilly has believed that investing in the U.S. and hiring U.S. workers—including right here in our hometown—makes good business sense,” Ricks said. “It’s no different now. “What we’d really love, however, is to do even more. And with a little help from Congress, I know we can.”
Republicans in Congress have proposed a tax overhaul that would give companies more incentives to keep jobs in the United States, lowering the top corporate tax rate from 35 percent to 20 percent, and to stop taxing the income that U.S. companies make in other countries. The debate over the proposal is expected later this year.
Last year, Lilly paid $636.4 million in income taxes, at a tax rate of 18.9 percent, according to its annual report filed with the Securities and Exchange Commission. That was up from $381.6 million a year earlier, at a tax rate of 13.7 percent.
Ricks called the current corporate tax system “antiquated,” saying the U.S. is the only country that double-taxes the sales of products made here and exported to other countries. He said the system has encouraged companies to expand production overseas.
Mayor Joe Hogsett, a Democrat, applauded Lilly’s investment but, in an interview afterward, declined to say whether he shared Ricks’ support of Republican tax reform.
“I’m staying away from the Washington partisan divide,” he said.
Gov. Eric Holcomb called Lilly’s investment the latest sign that Indiana’s low-tax, low-regulation business environment is working.
“Companies like Eli Lilly can go anywhere in the world,” he said. “We are a low-tax state and we are benefiting from it.”
Lilly’s expansion is part of a five-year, $1.1 billion investment to expand diabetes products manufacturing in the United States. The company announced in 2012 it would build a $140 million facility for insulin cartridge production in Indianapolis. A year later, it announced it would spend another $180 million to more than double the size of the facility.
More than 400 million people around the world have diabetes, including about 30 million Americans.