Novartis Announces $23 Billion Investment in U.S. Manufacturing Amid Global Trade Tensions

Swiss pharmaceutical giant Novartis has unveiled plans for a substantial expansion of its U.S. operations, committing $23 billion over the next five years to bolster its manufacturing capabilities and research presence in the country. This strategic move comes as the global pharmaceutical industry grapples with ongoing trade uncertainties and increasing pressure to localize production.

Massive Manufacturing Expansion

Novartis's ambitious plan includes the construction of six new manufacturing facilities and the expansion of three existing plants across the United States. The company aims to establish end-to-end production capabilities for all of its key medicines within U.S. borders, a significant shift in its global supply chain strategy.

Two new radiopharmaceutical plants will be built in Florida and Texas, focusing on the production of cancer drugs such as Pluvicto and Lutathera. Additionally, Novartis will expand its existing facilities in Indianapolis, Millburn, New Jersey, and Carlsbad, California.

The locations for four other planned facilities remain undetermined. Three of these will be dedicated to the manufacture of biologic drug substances, products, devices, and packaging, while the fourth will focus on chemical drug substances, pills, and packaging.

Research and Development Investment

In addition to its manufacturing expansion, Novartis plans to establish a $1.1 billion "biomedical research innovation hub" in San Diego. This new R&D center, scheduled to open between 2028 and 2029, represents a significant investment in the company's future innovation capabilities.

The decision to locate the hub in San Diego is particularly noteworthy, as it marks a reversal of Novartis's previous strategy. The company had previously closed an R&D hub in the same city as part of a broader restructuring effort that included shutdowns of sites in North Carolina, Colorado, and Illinois.

Strategic Implications and Industry Context

Novartis CEO Vas Narasimhan emphasized the strategic importance of this investment, stating, "These investments will enable us to fully bring our supply chain and key technology platforms into the U.S. to support our strong U.S. growth outlook."

The move aligns with a broader trend in the pharmaceutical industry, as companies respond to the Trump administration's trade policies and calls for increased domestic manufacturing. Other major players, including Eli Lilly, Merck & Co., and Johnson & Johnson, have announced similar capital expenditure initiatives aimed at expanding their U.S. presence.

Novartis's commitment to U.S. manufacturing extends beyond traditional pharmaceuticals. The company plans to locate some of its antisense oligonucleotide drug manufacturing in the U.S. for the first time, further solidifying its position in the production of complex medicines such as cell and gene therapies.

Despite the significant capital outlay, Narasimhan expressed confidence in the company's financial outlook, reaffirming Novartis's 2025 guidance and its mid- to long-term sales growth projections. The company maintains its target of achieving a core margin of 40%+ by 2027.

As the pharmaceutical landscape continues to evolve, Novartis's substantial investment in U.S. manufacturing and research capabilities signals a strategic shift that could reshape the industry's approach to global production and innovation in the years to come.