Novartis AG (NOVN.S) has significantly increased its stockpiles of pharmaceuticals in the United States and is positioning itself to withstand potential tariffs, Chief Executive Officer Vas Narasimhan said in a recent interview.
The move comes amid growing concern over US trade measures that could affect imports from Switzerland and the broader pharmaceutical sector.
Speaking to the Swiss newspaper Neue Zürcher Zeitung, Narasimhan emphasised that the company’s current inventory in the US is sufficient to last until mid-2026.
“We have significantly increased our stockpiles in the US, so they will certainly last until mid-2026,” he said, highlighting the company’s proactive approach in light of potential trade disruptions.
Current tariff landscape and trade deals
Last month, the US slapped 39% tariffs on Switzerland, Japan and China, and pharmaceuticals are still exempt from such tariffs.
However, the sector is following the results of an ongoing probe, which could lead to import tariffs for specific industries.
The US secured a bilateral trade deal with the European Union earlier this year. Almost all pharmaceuticals would be subject to a 15% tariff as part of this deal, with some exceptions for generic drugs.
The deal does offer some clarity, but uncertainty remains with regard to further trade action related to the Section 232 probe into the pharmaceutical sector.
Investments to localize production
In addition to stockpiling, Novartis has announced $23 billion in medium-term investments in the United States.
The company plans to manufacture its most critical products locally to reduce reliance on imports and mitigate any potential tariff impacts.
Narasimhan outlined a multi-year timeline for these production shifts. “It will likely take three to four years to get there.
But I estimate that we can make significant shifts within the next two years, for example, to carry out some of the final filling and packaging in the US,” he said.
The strategy aims to maintain supply chain resilience and ensure uninterrupted delivery of key medicines to the American market.
Prepare for multiple scenarios
While Novartis is taking precautions to safeguard itself, Narasimhan admitted that the exact extent of future tariffs is unknown.
Washington’s Section 232 probe might theoretically result in duties of up to 250%, but he regarded such conclusions as difficult to predict.
“We’re working on all possible scenarios, and hope the government realises that expanding production in the US will take time,” Narasimhan shared.
He emphasised that clarity will only emerge after the Section 232 investigation is completed, albeit no timetable for completion has been provided.
Strategic buffering and risk management
A dual strategy of stockpiling and domestic production is seen at a number of multinational pharmaceutical companies preparing for potential trade disruptions.
Novartis is building a buffer of existing inventory and then slowly shifting production domestically to help ensure that its operations and supply chains can function even in the event of multiple trade scenarios.
Analysts said such measures may provide a template for other firms to follow in economic environments dominated by vagaries of trade.
Stockpiling is a way to get by in the short run, but localisation of manufacturing provides long-run risk and regulatory relief — and may even lessen the effects of tariffs after they are implemented.
Outlook and ongoing uncertainty
For the time being, Novartis appears to be well prepared to deal with future tariff shocks.
The company’s present equity levels, combined with continued US investments, provide a strategic buffer that may help absorb trade disruptions.
Nonetheless, the ultimate impact will be determined by the results of the Section 232 investigation and any subsequent trade policy decisions made by the US government.
Narasimhan emphasised the company’s commitment to remaining flexible and adaptable, saying, “We won’t have further clarification until the so-called Section 232 probe is concluded. We’re not sure when the findings will be released.”
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