A Novartis cross-border partnership is turning into a standoff. The Swiss pharma has unilaterally terminated a plant leasing contract with Chinese CDMO Porton Pharma Solutions following a regulatory hiccup.
Porton disclosed the dispute in a May 13 release (Chinese, PDF). Along with an eviction notice that took effect immediately, Novartis said it reserves the right to press for 54.7 million euros (about $63.7 million) in potential damages and service charges, according to Porton, which is not to be confused with Porton Biopharma, a spin-out from Public Health England.
Porton said it does not agree with Novartis’ stance and that it remains in communications and negotiations with the Swiss pharma. But the Chinese CDMO warns that the fallout may escalate into legal proceedings and that an unfavorable outcome may have “a material adverse impact” on the company’s financials for 2026.
The dispute centers on a manufacturing hub located at Novartis’ Mengeš campus in Slovenia.
Through a series of agreements signed with Novartis back in 2022, Porton was planning to invest 50 million euros to establish R&D and manufacturing facilities at the Slovenian site. The goal was to provide services around process development for GMP intermediates and active pharmaceutical ingredients, development of analytical methods, and large-scale production throughout a drug’s life cycle.
At the time, Porton’s Chairman and CEO, Oliver Ju, highlighted Mengeš as the company’s first R&D and manufacturing site in Europe.
“In line with our strategy, the investment in [the] Mengeš facility will enable us to expand our offerings of drug substance in Europe and is an important milestone for Porton’s global layout,” he said in a statement in August 2022.
In May 2024, Porton successfully opened its “B31” R&D facility. Then in December 2025, construction work on the main “B30” production building was completed.
However, during the build-out, Porton said it found some “regulatory issues” tied to B30’s early paperwork, which would preclude the company from using the factory for its planned purposes.
Porton reached out to Novartis, which, alongside its designated entities, assisted in the regulatory approval process. But “significant disputes and disagreements remain” between the two parties today, Porton said.
“Out of caution, the company has temporarily suspended the investment and construction progress of B30,” Porton said.
Novartis, conversely, viewed the halt as a material breach of contract. Apparently deadlocked in their negotiations, Novartis unilaterally terminated the project and demanded that Porton vacate the facility within 90 days.
As of the disclosure date of May 13, Porton said it has not received any formal lawsuit from Novartis but said the firm will protect its interest if it comes to that.
Losing the Mengeš facility would deal a major blow to Porton, which was put on the map in 2022 by a major contract to manufacture Pfizer’s COVID-19 oral drug Paxlovid. As of the end of 2025, the Chinese CDMO had spent 447.6 million Chinese yuan ($65.8 million) on the construction of the facility, according to the company’s 2025 annual report.
If the two parties fail to resolve the dispute, Porton warns of potential major impairment charges on the infrastructure left behind, as well as potential contract defaults with clients and employee severance costs.
Novartis’ potential $64.7 million legal claims would also be a huge burden on Porton, which recorded 3.4 billion yuan (about $500 million) in 2025 revenue, with less than 100 million yuan ($63 million) in net income attributable to the parent company.
