At the World Economic Forum in Davos, Novartis CEO Vas Narasimhan told CNBC that the Swiss drugmaker is well insulated from any further U.S. tariffs on European pharmaceutical imports. He cited three pillars of the company’s defense: a $23 billion U.S. manufacturing investment announced in 2023, robust inventory levels already held stateside, and a standing agreement with the U.S. government that explicitly excludes Novartis from the levies. Narasimhan indicated that this triad of measures effectively “shields” the company, allowing it to maintain stable margins and supply chains regardless of any tariff escalation by February or June deadlines set by U.S. policy makers.

Narasimhan went on to forecast that Novartis will be completely free of U.S. tariff exposure by the middle of 2026. He linked this timeline directly to the ramp-up of the company’s expanded American footprint, which includes five new manufacturing and biologics sites expected to start commercial production between late 2024 and Q2 2026. These facilities will produce key oncology and immunology medicines, reducing reliance on European exports. Investors should note that the company’s capital expenditure on U.S. operations rose by 45% year-on-year in 2023, underscoring management’s commitment to de-risking at least $15 billion of annual U.S. sales.

During the interview, Narasimhan also sounded the alarm on Europe’s ability to sustain long-term growth in pharmaceuticals. He argued that unless European governments and private investors significantly boost funding for R&D, the region faces a “crisis point” within the next decade. He pointed to a 12% decline in EU public R&D spending as a percentage of GDP since 2015 and contrasted it with double-digit growth in U.S. biotech venture funding, which hit $35 billion in 2023. For Novartis, a leader in precision medicine, this gap underscores both a competitive advantage in its home market and a broader risk that could reshape regulatory incentives and partnership opportunities across the industry.