Novartis Announces $23 Billion Investment to Localize End-to-End Production of Critical Medicines in the U.S.

On April 10 local time, Novartis announced plans to invest $23 billion in U.S. infrastructure over the next five years to ensure that all critical drugs provided by Novartis for American patients will be manufactured in the United States. This commitment allows Novartis to expand its manufacturing, research, and technology operations in the U.S., with 10 facilities, including seven brand-new ones, creating nearly 1,000 new jobs for Novartis and adding approximately 4,000 jobs across the United States. Production capacity will cover active pharmaceutical ingredients (APIs) and biologic drug substances, as well as secondary production and packaging.

Based on this investment, in the next five years, Novartis will:

Establishing 1 Biomedical Research and Innovation Center in San Diego, California, which will be its second global R&D center in the United States; building 4 new manufacturing plants across various states, with 3 producing biologics active pharmaceutical ingredients (APIs), drug products, device assembly, and packaging, and 1 dedicated to chemical APIs, oral solid dosage forms, and packaging; constructing 2 new Radioligand Therapy (RLT) manufacturing plants in Florida and Texas; and expanding 3 existing RLT manufacturing facilities located in Indianapolis, Indiana, Millburn, New Jersey, and Carlsbad, California.

Through these investments, Novartis will have the production capacity for all its core technology platforms (including small molecules and biologics) in the United States. This new investment will introduce the internal production of Novartis' siRNA technology to the U.S. for the first time, reflecting its commitment to increasing U.S.-based manufacturing in its key therapeutic areas: oncology, immunology, neuroscience, as well as cardiovascular, renal, and metabolic diseases.With new manufacturing capabilities, Novartis plans to be able to produce 100% of its critical drugs end-to-end in the United States.

Novartis CEO Vas Narasimhan stated, "As a Swiss company with significant influence in the United States, these investments will enable us to fully integrate our supply chain and key technology platforms into the U.S. to support our strong growth prospects in the country. These investments also reflect the U.S.'s policy and regulatory environment that supports innovation, which helps us find the next medical breakthrough for patients. We are prepared for changes in the external environment and are confident in our 2025 guidance, mid-to-long-term sales growth prospects, and 2027 core margin guidance."

More than a week before Novartis launched this investment plan, Trump announced the much-anticipated "Liberation Day" tariff policy, imposing a basic 10% tariff on almost all goods imported into the United States. Different "punitive measures" were also set for countries with significant trade deficits with the U.S.

Soon after, Trump announced on Wednesday that most reciprocal tariffs would be suspended for 90 days, but the tariffs on China "continued to soar," with the current rate reaching as high as 145%.

Although pharmaceuticals are not subject to the latest round of tariffs, Trump has again made strong statements indicating that he plans to impose specific tariffs on the pharmaceutical industry, causing the industry's stock prices to fall in recent days. Trump had previously suggested that pharmaceutical tariffs could rise to "25% or higher."

Is Novartis' investment plan this time related to tariffs? We have no way of knowing. Novartis CEO Vas Narasimhan did not mention Trump's tariff policy at all in the company’s press release, only emphasizing that the investment strategy supports Novartis' "strong growth prospects in the United States." The CEO also stated that "the U.S. policies and regulatory environment that support innovation" help Novartis pursue medical innovation.

Since the beginning of this year, MNCs have been aggressively expanding, announcing the construction of factories in the United States. This is not a single case limited to Novartis.

In February 2025, Eli Lilly announced an investment of $27 billion to build four new drug manufacturing facilities in the United States. According to the official website, of the four planned production bases, three will focus on producing active pharmaceutical ingredients and further strengthening the supply chain to alleviate shortages in the U.S. supply chain, such as the active ingredient tirzepatide used in the weight-loss drug Zepbound and the diabetes treatment Mounjaro. The fourth production base will focus on future injectable therapies.

Lilly's CEO David Ricks stated at the press conference that this $27 billion plan is more than double the funds Lilly has reserved for domestic production in the U.S. since 2020, with total expenditures exceeding $50 billion. Ricks called it "the largest pharmaceutical expansion investment in U.S. history." Lilly anticipates that the new production bases will create over 3,000 high-skilled jobs, including engineers, scientists, operators, and lab technicians. Additionally, the company expects to generate nearly 10,000 construction jobs during the plant development phase.

In March 2025, Johnson & Johnson announced that it would invest more than $55 billion in its pharmaceutical and medical technology businesses in the United States over the next four years. This represents a 25% increase in investment compared to the previous four years. The landmark event of this large-scale investment by Johnson & Johnson is the official groundbreaking of a new biologics manufacturing plant in Wilson, North Carolina. The plant, with a total investment of $2 billion and a construction area of 500,000 square feet, will support the production of next-generation therapies for treating cancer, autoimmune diseases, and neurological disorders.

In addition to the new facility in North Carolina, Johnson & Johnson also plans to add three advanced manufacturing sites and expand several existing plants, although the specific locations for these projects have not yet been announced. Furthermore, the $55 billion investment will focus on research and development in areas such as neuroscience, robotic surgery, oncology, immunology, and cardiovascular diseases.

It is undeniable that, compared to the Chinese market, overseas developed countries represented by the United States currently demonstrate a higher drug market payment capability. In 2023, the scale of the U.S. pharmaceutical market reached 458.3 billion U.S. dollars, accounting for 31.1% of the global share, making it the largest pharmaceutical market in the world. The scale of China's pharmaceutical market in 2023 is expected to be 253.9 billion U.S. dollars, ranking second globally. Therefore, multinational corporations (MNCs) choosing to invest in the U.S. market aligns with the company’s development strategy and the commercial logic of the products.

However, according to VCBeat data, from 2018 to 2022, the annual compound growth rate of the U.S. pharmaceutical market was 5.2%, and it is expected to increase to USD 749.9 billion by 2027, with an annual compound growth rate of 4.7%; during the same period, China's pharmaceutical market size is expected to increase to USD 418.8 billion by 2027, with an annual compound growth rate of 9.9%. Based on its high efficiency, emerging technologies, and lower costs, China's pharmaceutical industry is rapidly catching up with the United States.

Targeting China's high-growth blue ocean market, in recent years, many MNCs have chosen to invest and source goods in China. According to VBInsight statistics, multinational pharmaceutical companies such as Eli Lilly, Sanofi, Novo Nordisk, and AstraZeneca all announced the construction of new factories in China in 2024. This fully demonstrates the MNCs' confidence in the potential of the Chinese market, as well as their determination to establish deep roots in China and enhance their localization strategies.

Moreover, the current "reciprocal tariff" targets the direction of commodity trade and has not yet addressed intellectual property areas such as licensing deals for innovative drugs. At this stage, the export volume of China-produced innovative drugs is relatively low, while there are more BD (Business Development) overseas transactions. In fact, many Biotech companies have even achieved profitability through BD. Therefore, for most Chinese innovative drug companies, the impact brought by tariff issues is relatively small.

More importantly, the current global pharmaceutical industry chain is highly integrated and has become inseparable. Only through unity and cooperation can countries promote the prosperity of the industry. A tariff war has no winners, and opposing the world will only lead to self-isolation. It's wise to take a long-term view. Let us look forward to Chinese pharmaceuticals going global.

References:

1.https://www.fiercepharma.com/manufacturing/following-lilly-and-jj-novartis-unveils-23b-investment-beef-us-manufacturing-rd

2.https://www.prnewswire.com/news-releases/novartis-plans-to-expand-its-us-based-manufacturing-and-rd-footprint-with-a-total-investment-of-23b-over-the-next-5-years-302425969.html