Novartis CEO hints at U.S. tariff protection deal on CNBC

• Narasimhan said Novartis 'thinks' it has a tariff exclusion agreement with the U.S. government and expects to be 'not really exposed' to tariffs by mid-2025 due to domestic production capacity
• Trump announced tariffs on multiple European nations including Switzerland's neighbors, with EU pharma exports to the U.S. totaling 84.4 billion euros ($98.1 billion) in the first three quarters of last year
• The company's previously announced $23 billion manufacturing investment enables it to produce in the U.S. for the U.S. market, providing additional protection beyond the potential government agreement

Summary

Key Development:

Novartis CEO Vas Narasimhan indicated at Davos that the Swiss pharmaceutical giant likely has an agreement with the U.S. government to shield it from tariffs. The CEO stated the company expects "not really" to be exposed to tariffs by mid-2025.

Key Facts:

• Novartis announced a $23 billion investment in manufacturing last year, which serves as protection against potential levies
• The company can produce in the U.S. for the U.S. market and maintains sufficient inventory
• Narasimhan stated: "We also have an agreement with the US government that excludes us from any tariffs we think"

Tariff Context:

President Trump has imposed tariffs on several European nations including the U.K., Denmark, Norway, Sweden, France, Germany, the Netherlands, and Finland, effective February 1, with rates escalating to 25% by June 1. This is part of pressure tactics related to Greenland acquisition efforts.

Market Implications:

• The European pharmaceutical sector faces significant exposure, with EU pharma exports to the U.S. totaling €84.4 billion ($98.1 billion) in the first three quarters of last year
• Novartis' regional supply chain investments and alleged tariff exemption could provide competitive advantage over European rivals
• The company's proactive manufacturing strategy positions it to avoid potential tariff costs that could impact margins and pricing

Sector Impact:

The pharmaceutical industry represents a major trade category between the EU and U.S., making tariff protection arrangements particularly valuable for affected companies.