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NVS Plans to Invest $23B in US Manufacturing Sites Amid Tariff Threat
NVSNovartis(NVS) ZACKS·2025-04-11 18:20

Group 1: Investment and Expansion Plans - Novartis announced a planned 23billioninvestmentoverfiveyearsinU.S.−basedinfrastructuretomanufactureallkeydrugsforitsU.S.patients[1]−ThecompanywillestablishabiomedicalresearchinnovationhubinSanDiego,CA,expectedtoopenduring2028−2029,aspartofitsexpansion[7]−Novartisplanstobuildfournewmanufacturingfacilitiesinthreestates,focusingonbiologicsdrugsubstances,drugproducts,andchemicaldrugsubstances[8][9]Group2:MarketContextandTariffs−TheexpansionfollowsPresidentTrump′sannouncementofnewtariffsonpharmaceuticalimports,aimedatboostingdomesticmanufacturing[3][4]−Thetariffsincludea3423 billion investment over five years in U.S.-based infrastructure to manufacture all key drugs for its U.S. patients [1] - The company will establish a biomedical research innovation hub in San Diego, CA, expected to open during 2028-2029, as part of its expansion [7] - Novartis plans to build four new manufacturing facilities in three states, focusing on biologics drug substances, drug products, and chemical drug substances [8][9] Group 2: Market Context and Tariffs - The expansion follows President Trump's announcement of new tariffs on pharmaceutical imports, aimed at boosting domestic manufacturing [3][4] - The tariffs include a 34% tax on imports from China and a 20% tax on the European Union, with a baseline tax of 10% on imports from all countries [3] - The U.S. imports a significant amount of finished drugs and active pharmaceutical ingredients, with a large portion coming from China, which has retaliated with increased tariffs [5] Group 3: Financial Outlook - Novartis believes the investment supports its sales guidance of 5% CAGR during 2024-2029, with total investment in U.S. operations expected to reach nearly 50 billion over the next five years [10] - The company's shares have risen 8.7% year to date, contrasting with the industry's decline of 8.2% [2]