Novartis dodges Trump’s drug tariff blitz with $23bn US reshoring plan

Novartis AG has announced a transformative $23 billion investment aimed at significantly expanding its pharmaceutical manufacturing and research capabilities within the United States. The five-year strategy will involve the development of 10 facilities, including seven entirely new sites, and is designed to localize 100% of production for key medicines destined for the US market.

This substantial investment, announced from East Hanover, New Jersey, marks a notable shift in Novartis’ operational model, aligning with a broader global movement toward supply chain resilience. It also supports Novartis’ projected +5% constant currency compound annual sales growth (CAGR) through 2029. By centralizing end-to-end production within the US, Novartis aims to enhance reliability, respond swiftly to domestic healthcare demands, and reduce dependency on international manufacturing hubs.

Vas Narasimhan, CEO of Novartis, underscored the rationale behind the move, pointing to the United States’ pro-innovation regulatory climate as a key enabler for such expansive investment. He said the new infrastructure would ensure Novartis’ ability to deliver consistent, high-quality therapies while responding to shifting global supply dynamics and reinforcing the company’s strong growth trajectory.

How are Trump’s tariff threats influencing Novartis’ U.S. strategy?

Novartis’ massive $23 billion bet on American manufacturing and research infrastructure comes at a pivotal geopolitical moment. Just days before the announcement, U.S. President Donald Trump proposed steep new tariffs on pharmaceutical imports as part of his broader “America First” trade agenda. These proposed measures — which could see tariffs of up to 125% on drugs and active pharmaceutical ingredients sourced from countries like China and India — have created fresh urgency for multinational drugmakers to localize their production inside the United States.

While Novartis has not explicitly cited the tariff threat in its announcement, the timing of its investment aligns closely with the Trump administration’s aggressive stance on reshoring essential industries. By moving its entire supply chain for key medicines onshore, Novartis is effectively insulating itself from the potential costs and supply shocks that punitive tariffs could trigger. This not only ensures smoother regulatory navigation but also reduces long-term cost volatility tied to geopolitical shifts.

Industry analysts view this strategy as both a defensive play against future import taxes and a proactive alignment with emerging U.S. industrial policy. Pharmaceutical companies operating globally are increasingly aware that building resiliency into supply chains is not just about efficiency—it’s about survival in a policy environment marked by rapid change and rising protectionism.

The Novartis move could set a precedent as other pharma giants weigh similar shifts in response to both the rhetoric and regulatory pressure coming from Washington. While the specifics of the tariffs are still under debate, the political momentum behind them appears strong, and investors are already rewarding companies that appear prepared for a more insular U.S. trade regime.

How will Novartis transform its US manufacturing infrastructure?

The initiative will include the construction of four new large-scale manufacturing facilities across states yet to be named. These will include three biologics-focused plants producing drug substances, finished products, devices, and packaging components. The fourth will manufacture chemical drug substances and oral solid dosage forms.

Two new radioligand therapy (RLT) plants will also be established in Texas and Florida. These investments will support the company’s leadership in the RLT space, a fast-growing therapeutic category in oncology. Simultaneously, three existing RLT sites—in Carlsbad, California; Millburn, New Jersey; and Indianapolis, Indiana—will undergo substantial expansion.

The ramp-up will enable Novartis to manufacture advanced therapy platforms domestically, including small molecules, biologics, gene and cell therapies, and, for the first time, siRNA-based medicines. These facilities are expected to collectively create 1,000 direct jobs and support another 4,000 across associated supply chains.

Why is San Diego becoming Novartis’ next global R&D hub?

As part of its R&D expansion strategy, Novartis will invest $1.1 billion in a new state-of-the-art research centre in San Diego, California. The complex, which is projected to open between 2028 and 2029, will serve as the company’s West Coast biomedical innovation hub. It will complement existing centres in Cambridge, Massachusetts, and Basel, Switzerland.

This move positions Novartis closer to one of the US’s most prominent biotechnology clusters. San Diego is home to top academic institutions, venture-backed startups, and leading biotech firms, offering fertile ground for partnerships, talent acquisition, and accelerated innovation. The facility will provide cutting-edge laboratory infrastructure to enable drug discovery in Novartis’ core therapeutic areas—oncology, immunology, neuroscience, cardiovascular, renal, and metabolic diseases.

This new R&D hub also reflects a growing trend in the pharmaceutical sector, where firms seek proximity to scientific ecosystems that combine academic research, venture capital, and advanced infrastructure.

How does Novartis’ investment support US industrial and healthcare policy?

Novartis’ $23 billion commitment comes at a time when US policymakers are pushing for reshoring of critical supply chains in response to vulnerabilities exposed during the COVID-19 pandemic. The initiative aligns with the US government’s strategic goals to strengthen domestic pharmaceutical production and reduce reliance on imports for key drugs and active pharmaceutical ingredients (APIs).

By shifting more of its end-to-end manufacturing to American soil, Novartis is not only mitigating geopolitical risk but also signalling long-term alignment with domestic policy incentives, including tax benefits and fast-tracked regulatory pathways for locally made drugs.

The company’s investment is expected to make a substantial contribution to the US economy, with thousands of jobs added across manufacturing, research, and construction. It also enhances Novartis’ ability to rapidly respond to emerging health challenges, a strategic advantage in the current global context.

What is the investor sentiment around Novartis’ US investment strategy?

The market has responded positively to the announcement. Novartis’ American Depositary Receipts (ADRs) rose by 3.5% following the disclosure of its US expansion plans, reflecting optimism about the company’s growth prospects and operational resilience. Analysts see the investment as a strategic hedge against potential disruptions, including tariff impositions on imported pharmaceuticals and inflationary supply chain pressures.

Current sentiment among market analysts leans toward a “Hold” recommendation. According to aggregated forecasts, the average 12-month price target for Novartis stock is approximately $116.62, suggesting a potential upside of around 14% from current trading levels. Analysts at MarketBeat and MarketScreener maintain a neutral stance, citing confidence in long-term profitability but caution around execution timelines and regulatory shifts.

The strategic investment also reinforces Novartis’ 2027 core operating margin guidance of over 40%, adding credibility to its mid- to long-term financial outlook. For investors, this could signal that Novartis is well-positioned to weather external volatility while delivering sustained value through innovation and operational excellence.

Is Novartis setting a new benchmark for US localisation in pharma?

As global pharmaceutical companies reassess supply chain vulnerabilities and policy risks, Novartis’ aggressive US localisation strategy is likely to serve as a model for the industry. Its peers, including Roche, AstraZeneca, and Sanofi, have also been expanding US operations, but few have matched the scope or end-to-end integration of Novartis’ announced plan.

By bringing high-value, complex manufacturing platforms such as RLTs and siRNA production to the US, Novartis is demonstrating a level of commitment and operational ambition that few competitors have yet mirrored. The approach is expected to resonate with both regulators and healthcare providers concerned about drug availability and security of supply.

This strategy may accelerate a larger reconfiguration in pharmaceutical manufacturing, where regional hubs replace globally dispersed production. For Novartis, this not only reduces risk but also enhances speed to market, quality assurance, and customer trust.