Novartis ($NOVN.S) terminated Porton manufacturing deal and warned of potential $64m legal claims

Novartis terminated a manufacturing and facility leasing agreement with Chinese CDMO Porton Pharma Solutions following a dispute tied to regulatory issues at a production site in Slovenia.

According to disclosures from Porton, Novartis issued an immediate eviction notice linked to the company’s manufacturing hub at the Swiss drugmaker’s Mengeš campus and reserved the right to pursue claims worth approximately €54.7 million ($63.7 million) covering potential damages and service charges.

The disagreement centred on Porton’s planned investment into research and manufacturing operations at the Slovenia facility, which was intended to support process development, active pharmaceutical ingredient production and large-scale manufacturing services across drug lifecycles.

Porton said it had identified regulatory issues linked to documentation for the main B30 production facility during construction work, which could prevent the site from being used for its intended manufacturing activities. While the company said Novartis assisted in efforts to address the approvals process, negotiations between the two groups reportedly reached a deadlock.

Novartis viewed Porton’s suspension of investment and construction progress as a material breach of contract and moved to terminate the partnership.

The dispute could have significant financial implications for Porton, which warned that an unfavourable outcome may materially affect its 2026 financial performance. The company had already invested more than 447 million yuan (approximately $65.8 million) into the facility by the end of 2025.

The situation also highlighted growing operational and regulatory risks tied to cross-border pharmaceutical manufacturing partnerships, particularly as global drugmakers continue expanding supply chains across Europe and Asia.