Roche and Novartis: Investments in trouble due to Trump's price shock!

Roche and Novartis: Investments in trouble due to Trump's price shock!

The uncertainty surrounding future investments by the pharmaceutical industry in the USA has increased. Roche expresses clear doubts about its investment plans as the US administration promises significant discounts on medicines. This could have a serious impact on the company's long-term profit outlook. Over five years, Roche plans to spend $50 billion on capacity expansion, but is forced to review those investments. Roche's press office has confirmed that the planned spending could be in question under President Donald Trump's proposals to sharply cut drug prices. Trump has ordered the US Department of Health and Human Services to begin negotiations with pharmaceutical companies within 180 days and to create a benchmark price list within 30 days. If manufacturers do not comply with this request, legal measures could follow, reports finanzen.ch.

In another dangerous step, Trump is threatening the pharmaceutical industry with punitive tariffs of 25 percent or more on medicines. This threat was recently made but is considered unlikely tagesanzeiger.ch. The Health Care Distribution Alliance has already warned that such punitive tariffs could disrupt supply chains and lead to higher drug prices in the future. High drug prices have become a key campaign issue, embraced by both Democrats and Republicans. Meanwhile, pharmaceutical chiefs around the world fear that Trump's drive to lower drug prices could ultimately be undermined by subsequent administrative actions already promised by President Joe Biden.

Investments in research and development

Novartis is more optimistic about the future; the company plans to invest $23 billion over the next five years to develop factories and research laboratories in the United States. Unlike Roche, Novartis has not expressed any intention to review its plans due to the current political landscape. The US market is considered the largest and most lucrative for pharmaceutical companies, giving them scope for expensive therapies such as the gene therapy Zolgensma, which is sold in the US for $2.1 million.

In addition, a meeting will be organized between Trump and selected US pharmaceutical bosses to discuss the price cuts mentioned. Due to its long research and development cycles, the pharmaceutical industry has great concerns that government intervention in drug prices could have negative consequences for future innovations. The complex, globally networked production processes cannot be easily converted, which puts manufacturers in a difficult position.

Although Trump is seeking independence from foreign production, drug production remains highly globalized and highly dependent on international supply chains. There seems to be a wide gap between expectations and reality here, which increases uncertainty for the industry. Roche, with over 25,000 employees in the US, is being watched particularly closely in this situation, as future decisions may affect not only the company itself, but the entire pharmaceutical industry in the US.