Novartis Builds US Drug Reserves Against Potential Tariffs

Novartis AG (NYSE:NVS) has reportedly built up its pharmaceutical stockpiles in the U.S. as a cushion against the potential impact of tariffs under consideration by the Trump administration, chief executive Vas Narasimhan said in a recent interview.

Currently, U.S. tariffs do not apply to pharmaceuticals, despite the 39% levy Washington imposed on Swiss imports last month. However, the industry is watching closely as an investigation could still lead to sector-specific duties.

In July, the U.S. and European Union struck a bilateral trade deal that introduced a 15% tariff on pharmaceuticals, excluding some generics. Reuters notes that while that deal altered the global trade outlook, Novartis stated that it is positioned to manage future risks.

Narasimhan told a Swiss newspaper that the company has already “significantly increased” its U.S. inventories, ensuring supplies are secured through at least mid-2026.

Reuters highlighted that the move is part of a broader strategy to reduce exposure to shifting trade policies.

Novartis has also pledged $23 billion in medium-term U.S. investments, with plans to eventually manufacture its most critical products for the American market domestically.

According to Narasimhan, the process could take three to four years, though meaningful adjustments, such as shifting final filling and packaging operations, could happen within two years.

“This should allow us to fully mitigate any tariffs,” Narasimhan told Reuters, underscoring the company's efforts to maintain reliable access to the U.S. market regardless of trade outcomes.

Still, uncertainty lingers. Washington's Section 232 investigation into the pharmaceutical sector could impose tariffs as high as 250%, though Narasimhan cautioned that it remains unclear whether such extreme measures are realistic.

The results of the investigation have no clear timeline, leaving companies like Novartis preparing for a wide range of possibilities.

By securing additional supplies and planning new U.S. production capacity, Novartis is attempting to balance near-term protection against tariffs with long-term resilience in its American operations.

Price Action: NVS stock is up 0.47% at $123.51 at the last check on Monday.

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