Novartis touts $23B investment in US manufacturing, downplays potential tariffs

With its planned $23 billion investment in manufacturing and R&D in the United States, Novartis is “on track” in the “coming years” of achieving its goal of fully producing 100% of its key medicines end-to-end in the U.S., according to CEO Vas Narasimhan.

Earlier this month, the Swiss-based medicines company announced it will invest $23 billion over five years on 10 U.S. manufacturing and R&D sites — including seven new facilities, six of which will be manufacturing plants.

However, TD Cowen analyst Steve Scala said on Novartis’ Tuesday earnings call that the company “has among the fewest manufacturing plants in the U.S. in the industry.” Scala asked Narasimhan how much of its $23 billion investment will be complete by 2028, and why such a “profound pivot” didn’t start sooner.

Narasimhan acknowledged that Novartis “could have done this earlier” given that the U.S. is “our most important single market from a growth and revenue standpoint.” Within the planned five-year period, he said the company “can get the necessary manufacturing plants up and running, given our footprint that we already have in certain locations to manage this.”

Overall, Narasimhan said the $23 billion investment was a “strategic decision independent of the President to make sure that we have that capacity inside the United States.”

The five-year, $23 billion investment announced by Novartis comes on the heels of President Trump’s renewed threat of imposing tariffs on pharmaceuticals meant to bring drug manufacturing back to the U.S.

Novartis has followed major U.S. manufacturing investment announcements recently from large pharmaceutical companies, including Johnson & Johnson’s plans to spend more than $55 billion and Eli Lilly’s planned $27 billion capital expenditure.  

When it comes to tariffs, Narasimhan on Tuesday’s earnings call said Novartis has taken “appropriate actions with inventory levels and in terms of managing our supply chain to enable us to feel comfortable we can manage it this year and in the medium term.” He emphasized that the company believes the tariff threat is “manageable and not something that we need to highlight with respect to our financial outlook.”

Narasimhan added that Novartis’ guidance “fully accounts for any potential tariffs that we’ve modeled or scenarios that we expect in this year and in the medium-term guidance.”

Looking ahead, 2025 net sales are expected to grow high single-digit and Novartis has said its $23 billion investment in U.S. manufacturing and R&D supports its 2024-2029 sales guidance of +5% constant currencies (cc) compound annual growth rate (CAGR).

In addition to the U.S., the company said it is focused on growing its other “priority geographies” — China, Germany and Japan — with three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) “being prioritized for continued investment into new R&D capabilities and manufacturing scale.”