US contract manufacturing deals for FDA-approved drugs recorded their steepest decline in five years during 2025, even as record tariffs on EU pharmaceuticals came into force, according to new data from intelligence platform GlobalData.
Despite a 15% US tariff on European pharmaceutical imports, biopharma companies are outsourcing US-market drug manufacturing to European contract development and manufacturing organisations (CDMOs) rather than domestic providers.
According to the company's analysis, in 2025, Europe recorded more than triple the contract manufacturing deal volume of the US — the widest gap in the five-year period analysed.
Katia Djebbar, Pharma Analyst at GlobalData, said the post-pandemic recovery initially lifted deal volumes on both sides of the Atlantic. "Between 2023 and 2024, deal volume increased in both the US and Europe as the industry recovered post-pandemic," she noted.
The steep US decline seen in 2025, therefore, represents a sharp reversal of that trajectory.
Germany is emerging as the focal point of Europe's growing appeal.
According to GlobalData's Drugs by Manufacturer database, Germany accounted for 12 contract manufacturing deals for US-market drugs in 2025 alone, averaging nine per year during the 2020-25 period, consolidating its position as Europe's leading pharmaceutical manufacturing hub.
US-headquartered companies are among those driving the trend.
Nine of the 14 US-based pharma firms that outsourced manufacturing in 2025 (including Johnson & Johnson and Vertex Pharmaceuticals) signed a combined 13 Europe-based deals.
Fewer than half invested in US facilities, completing just eight domestic contracts.
The shift extends beyond outsourcing. Novo Nordisk and Eli Lilly announced investments of $501m and $3bn, respectively, to expand their European manufacturing sites.
Novo is planning to scale up its tablet facility in Ireland to support US demand for Wegovy in pill form — the first and only oral GLP-1 receptor agonist approved in the Western market following recent FDA approval.
Djebbar warned that the data signals a structural rather than temporary shift.
The region, with Germany in particular, is increasingly becoming an attractive and well-established hub for pharma manufacturing for the US market.
"Such a shift may hinder the current US administration's plans to reshore domestic contract manufacturing," she said.
For biopharma supply chain and CDMO professionals, the data underscores the growing strategic importance of European manufacturing capacity and raises significant questions about the efficacy of tariffs as a tool for reshoring pharmaceutical production.