Novartis’ cross-border partnerships are at odds. A Swiss pharmaceutical company has unilaterally terminated its factory lease agreement with Chinese CDMO Porton Pharma Solutions following regulatory issues.
Porton clarified the controversy in a May 13 release (in Chinese, PDF). Porton said Novartis reserves the right to sue for 54.7 million euros (about $63.7 million) in potential damages and service fees, along with the eviction notice, effective immediately. (Porton is not to be confused with Porton Biopharma, which was spun out from Public Health England).
Porton said he disagreed with Novartis’ position and that communications and negotiations with the Swiss drugmaker were continuing. However, China’s CDMO has warned that this impact could lead to legal proceedings and that an adverse outcome could have a “material negative impact” on the company’s finances in 2026.
The center of the dispute is Novartis’ manufacturing site at its Menges campus in Slovenia.
Through a series of agreements signed with Novartis in 2022, Porton planned to invest €50 million to establish an R&D and manufacturing facility at the Slovenian site. The goal was to provide services for process development, analytical method development, and large-scale production of GMP intermediates and active pharmaceutical ingredients throughout the drug lifecycle.
At the time, Oliver Ju, Porton’s chairman and CEO, highlighted that Mengesch was the company’s first R&D and manufacturing site in Europe.
“In line with our strategy, our investment in the Mengesch facility will enable us to expand our API offerings in Europe and is an important milestone in Porton’s global expansion,” he said in an August 2022 statement.
In May 2024, Porton successfully opened the “B31” research and development facility. Construction of the main production building for the B30 was completed in December 2025.
However, Porton said he discovered some “regulatory issues” related to B30’s early paperwork during construction that would prevent the company from using the plant for its planned purpose.
Porton contacted Novartis, which worked with designated entities to assist with the regulatory approval process. But Porton said “significant disputes and disagreements remain” between the two parties.
“Out of an abundance of caution, the company has temporarily halted investment and construction progress on B30,” Porton said.
Conversely, Novartis considered the suspension to be a material breach of contract. Negotiations appear to have stalled, and Novartis unilaterally terminated the project and required Porton to vacate the facility within 90 days.
Mr. Porton said that as of May 13, the disclosure date, the company had not received a formal lawsuit from Novartis, but that the company would protect its interests if it did.
Losing the Mengesch facility would be a major blow to Polton, which gained attention in 2022 with a major contract to manufacture Pfizer’s oral COVID-19 drug paxlobid. According to the company’s 2025 annual report, the China CDMO spent 447.6 million Chinese yuan ($65.8 million) on facility construction as of the end of 2025.
Porton warned that if the parties are unable to resolve the dispute, there could be significant impairment charges on the remaining infrastructure, as well as breaches of customer contracts and employee severance payments.
A potential $64.7 million legal claim from Novartis will also be a huge burden for Porton, which has 2025 sales of 3.4 billion yuan (about $500 million) and net profit attributable to the parent company of less than 100 million yuan ($63 million).
