Won’t lead to more medicines investment

Trump’s tariffs won’t lead to more medicines investment in US, Sandoz boss says

The generics drugmaker is investing heavily, “predominantly” in Europe.

By Mari Eccles

Imposing tariffs on the pharmaceutical industry will not encourage generic drugmakers to invest in the United States, the boss of Sandoz told POLITICO.

Richard Saynor, CEO of the Swiss generics giant, said that although Donald Trump’s administration is more open to meeting drugmakers than any previous government, the U.S president’s preferred method of slapping tariffs on the industry is not going to entice companies to move production to the U.S.

“A stick is not going to encourage us to make significant capital investment in to a market which is unsustainable,” he said in a sit-down interview with POLITICO last week.

Trump has imposed tariffs on several different countries and sectors, and has repeatedly threatened to slap levies on the pharmaceutical industry in a bid to bring producers to the U.S.

Many big pharma companies base their international operations in Ireland, although most of the cheaper generic drugs come from China and India.

Trump says that tariffs will help to bring the prices down for American patients — although industry associations warn the opposite.

“Directionally, I don't necessarily disagree with what the administration is trying to achieve, which is affordable, high-quality health care, and security of supply,” Saynor said.

But imposing tariffs on companies like Sandoz — whose prices are controlled by market forces and often winner-takes-all tenders — gives them only two choices, he argued.

“Either we raise pricing,” he said. “If we can't raise prices, we lose money and withdraw the product.”

“Tariffs are not a mechanism to encourage a business which is already marginal in the U.S. to manufacture in the U.S.,” he added.

Instead, the generics company — which spun off from Novartis in 2023 — is going to continue investing “predominantly” in Europe, he said. 

Saynor was speaking to POLITICO from Slovenia, where Sandoz last week announced the start of construction of a new biosimilars production center in Brnik, just outside the Slovenian capital.

It follows recent investments in the country that will total more than $1.1 billion by 2029, including a new biosimilar drug substance production center in Lendava and a biosimilar development center in Ljubljana, moves that made the generics firm the fourth-biggest employer in the country.

Sandoz has had a presence in the Central European country for decades, after it bought the former state company Lek in 2002. But it also has manufacturing sites in Germany, Austria, Spain and Asia.

“We're investing heavily. We're continuing to look at where we invest and how we invest, but predominantly ... in Europe,” he said.

Bucking the trend

Much of the conversation dominating the political class in Brussels and Washington has focused on competition with Asia, with concerns in both centers that there’s not enough domestic production.

Saynor also said that the “political environment, on both sides of the Atlantic” is “forcing a discussion” around medicine supply chains.

The European Commission announced in March its Critical Medicines Act, the EU’s attempt to shore up the supply of the most important drugs on the continent, with an aim to increase investment and manufacturing.

“One of the reasons we choose Slovenia, we have a very good relationship with the government,” he said. “The local university puts on development programs for graduates so that they are ready to be employed in our industry. Being one of the leading employers, we have a strong brand, so it means we attract talent. So it becomes a whole ecosystem,” he said.

The company wouldn’t necessarily find it so easy in other countries. “If we did that in Germany, we’re just another company, so we wouldn't punch in the same way,” he said.

Generics vs. Big Pharma

Although Saynor said the support shown by governments and the EU is good, he’d like to see them come down harder on the bigger innovative companies that develop patented drugs.

“You see originators using patent abuses to prolong [market monopolies and] block entry,” he said. “Challenging the behaviors of originators to allow more investment to bring more products sooner to the market would also help.”

“Politicians love to open sites, particularly innovator sites, because it's a shiny new thing, and it sounds fantastic,” he said. Generics are “less sexy” for politicians. 

Nevertheless, Slovenia’s Prime Minister Robert Golob attended the ground-breaking ceremony on Tuesday.

And Saynor said that despite Sandoz’s opposition to Trump’s approach to tariffs, the administration itself had been welcoming.

“The positive is we have better access to this administration than we've ever had,” he said, adding that members of his company meet with them on a fortnightly basis.