Novartis Working on Price Cut Proposals for US, CEO tells NZZ

(Bloomberg) — Novartis AG is looking at ways to propose price cuts to US President Donald Trump by the end of the month, Chief Executive Officer Vas Narasimhan told Neue Zuercher Zeitung in an interview on Saturday.

“We’re working with the government to find constructive solutions so Americans pay less for their medicines,” Narasimhan said, adding that the company was also working to eliminate the price gap between the US and other industrialized countries.

In August, Trump asked drugmakers across the globe to lower what they charge Medicaid for existing drugs. He also asked them to guarantee future medicines be launched and stay at prices on par with what they cost overseas. The US president gave pharmaceutical companies 60 days to voluntarily comply, threatening to “deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices” if they don’t.

Narasimhan said that the company isn’t adjusting its outlook in response to Trump’s demands at this time. The firm still expects medium-term revenue growth of 5% from 2024 to 2029.

“We continue to believe that profits will grow faster than revenue. Of course, if something were to change dramatically, we would have to make adjustments. But no matter what happens, under current US law, any changes should be manageable”, he told NZZ.

In Switzerland drug prices are far too low, according to Narasimhan. They are also at the lower end of the scale compared to other OECD countries, he added.

Switzerland, where Novartis is headquartered, was hit with a 39% tariff rate by the US in August, far higher than the 15% levied on the neighboring European Union. Pharmaceutical companies were initially exempt from the tariffs, but this could change at any moment.

The Swiss pharma giant said it’s well prepared for the 15% tariff that’s considered for pharmaceutical shipments from the European Union to the US. “We have significantly increased our stockpiles in the US, so they will certainly last until mid-2026,” Narasimhan said.

Novartis expects the tariffs to be levied primarily on the active ingredient in the medications. However, its exports of active ingredients from Switzerland to the US are limited.

“So, if there were indeed a specific Swiss pharmaceutical tariff, we could easily handle it. We are more concerned about the tariffs for the entire pharmaceutical industry than the specific Swiss situation,” Narasimhan said. The firm believes that any tariff for the entire pharmaceutical sector will override country-specific tariffs.

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