By Klaus Lauer and Ludwig Burger

Eli Lilly will build its first plant in Germany for 2.3 billion euros ($2.5 billion) in the western town of Alzey, the U.S. pharmaceuticals maker said on Friday, as the sector scrambles to meet demand for new diabetes and obesity therapies.

The new site will produce diabetes drugs and injection pens to administer them, Lilly said in a statement.

A person familiar with the matter told Reuters on Friday that among the therapies to be produced will be diabetes drug Mounjaro, which has been used off-label for weight loss and which last week was cleared for that additional use in the United States.

Eli Lilly and Danish rival Novo Nordisk are leading a race to seize an estimated $100 billion future global market for anti-obesity treatments. Novo has said that the industry is far from producing enough to meet demand.

Plans for Lilly's first major production complex in Germany come as drugmakers are growing increasingly sensitive to political pressure to manufacture critical healthcare products closer to the markets they serve after the coronavirus pandemic exposed the vulnerability of global supply chains.

"This investment encourages the government in its efforts to make Germany more attractive as a pharmaceutical centre," said Health Minister Karl Lauterbach.

"By doing that, we will secure fast access to new therapy options and reduce dependency on fragile supply chains," he added.

(Editing by Matthias Williams and Jason Neely)