Novartis Announces Major U.S. Investment Plan
Swiss drugmaker Novartis (NOVN.S) announced on Thursday its plan to invest $23 billion to build and expand 10 facilities in the United States. This decision comes amid renewed concerns over potential drug import duties from the Trump administration. Novartis aims to strengthen its U.S. operations with new manufacturing plants and a research and development facility.
Building New Manufacturing Plants and R&D Facility
The company intends to build six new manufacturing plants, some of which will focus on producing raw pharmaceutical ingredients. Additionally, a new R&D site will be established in San Diego, California. These facilities will contribute to Novartis’ strategy of producing medicines for the U.S. market domestically, reducing reliance on imports.
Job Creation and Expansion Plans
Over the next five years, Novartis expects the new sites and plant expansions to create over 1,000 skilled jobs, including engineers and scientists, along with an additional 4,000 jobs in support and construction. While the locations for four plants remain undecided, two of the new facilities will be situated in Florida and Texas, producing specific cancer therapies.
U.S. First Strategy Amid Tariff Concerns
Novartis’ investment comes shortly after President Donald Trump’s announcement of a potential “major” tariff on pharmaceutical imports, causing a temporary drop in drugmaker shares. Despite the looming tariffs, Novartis CEO Vas Narasimhan explained that while tariffs are painful, they are not the primary reason for this significant U.S. investment. The move is part of Novartis’ strategy to produce all the drugs it sells to Americans within the U.S. instead of relying on imports.
Novartis and the U.S. Pharmaceutical Market
With this $23 billion investment, Novartis aims to solidify its position in the U.S. pharmaceutical market, the largest in the world. Over the next five years, the company plans to invest nearly $50 billion in its U.S. operations. Other major drugmakers, including Eli Lilly and Johnson & Johnson, have made similar U.S. manufacturing investments this year.
Challenges in U.S. Manufacturing Expansion
While Novartis and other drugmakers are increasing their domestic production, industry trade group PhRMA has noted that establishing new U.S. manufacturing facilities can take 5 to 10 years and cost up to $2 billion due to regulatory requirements and other challenges.
