Novartis to Invest $23bn in US Manufacturing and Research Amid Trade Uncertainty
Swiss pharma group Novartis has announced a significant investment of $23bn in the US over the next five years, aiming to expand its manufacturing and research and development capabilities. This move is part of the company's strategy to reconfigure its supply chains in preparation for potential US tariffs. Novartis produces a wide range of medicines, including cancer and cardiovascular drugs, and plans to produce all of its key US drugs within the country.
The investment will lead to the construction of seven new facilities and the expansion of existing ones. Key areas of focus will include the production of active pharmaceutical ingredients, an area where the industry is heavily reliant on supplies from China and India. Novartis estimates that the investments will create nearly 1,000 jobs at the company, with a further 4,000 jobs created in the supply chain and local communities.
The pharmaceutical industry was exempt from the global tariffs announced by the US administration, but it is expected that these tariffs will be imposed soon. In response, several big drug companies have announced significant investments in the US. For example, Indianapolis-based Eli Lilly announced plans for $27bn of investment in February, while Johnson & Johnson said it would invest more than $55bn in four factories. AstraZeneca also announced a $3.5bn investment in the US in November.
Novartis will establish a $1.1bn research and development institute in San Diego, its second in the US after its existing facility in the Boston area. The company will also open manufacturing facilities for radioligand therapy, an innovative cancer treatment, in Florida and Texas, and expand factories already making the treatment in Indiana, New Jersey, and California.
The company's chief executive stated that the investments reflect the pro-innovation policy and regulatory environment in the US that supports the company's ability to find the next medical breakthroughs for patients. The company is prepared for shifts in the external environment and is fully confident in its guidance for the year, and the mid to long term, including its guidance for a core margin of at least 40 per cent by 2027.
The investment is a significant boost to the US economy and demonstrates Novartis' commitment to innovation and patient care. With the potential for US tariffs looming, the company's decision to invest in US manufacturing and research and development is a strategic move to ensure the continuity of its operations and supply chains. As the pharmaceutical industry continues to evolve, Novartis is well-positioned to drive growth and innovation in the years to come.
