Origin and Core of the Contract Dispute Swiss pharmaceutical giant Novartis has unilaterally terminated a plant leasing contract with the Chinese CDMO Porton Pharma Solutions following a deadlock in corporate negotiations. The cross-border dispute centers on a manufacturing hub situated at Novartis’ Mengeš campus in Slovenia.
Under a series of agreements finalized in 2022, Porton planned to invest 50 million euros to establish R&D and manufacturing operations at the Slovenian site to provide services around process development for GMP intermediates, active pharmaceutical ingredients (APIs), and large-scale production. While the “B31” R&D facility successfully opened in May 2024, and construction on the main “B30” production building concluded in December 2025, Porton uncovered regulatory discrepancies linked to B30’s initial paperwork during the expansion. These regulatory issues precluded the company from using the factory for its intended purposes. Despite administrative assistance from Novartis in the approval process, severe disagreements remained between both entities, leading Porton to temporarily suspend its construction and investment progress for B30.
Novartis’ Directives and Porton’s Counter-Stance Novartis viewed the construction halt as a material breach of contract. Consequently, the Swiss pharmaceutical firm unilaterally terminated the project, issuing an immediate eviction notice that requires Porton to vacate the facility within 90 days. Furthermore, Novartis declared that it reserves the right to pursue 54.7 million euros (approximately $63.7 million) in potential legal damages and related service charges.
Porton disclosed the ongoing dispute on May 13, 2026, stating that it does not agree with Novartis’ contractual stance. Although Porton remains in communications and negotiations to resolve the issue, the Chinese CDMO warns that the fallout may escalate into formal legal proceedings.
Financial Projections and Corporate Fallout Losing the Mengeš production hub represents a significant setback for Porton, which had already injected 447,6 million Chinese yuan ($65,8 million) into the construction of the facility by the end of 2025. If the two parties fail to settle the deadlock, Porton warns of potential major asset impairment charges on the left-behind infrastructure, along with contract defaults with existing clients and employee severance liabilities. Additionally, Novartis’ potential $63.7 million legal claim would place a massive financial burden on Porton, which recorded 3.4 billion yuan (about $500 million) in 2025 revenue, but generated less than 100 million yuan ($63 million) in net income attributable to the parent organization.