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Pfizer shares rose when it agreed to slash some of its drug prices for Americans enrolled in the Medicaid insurance programme.
– Pharmaceutical stocks capped off their best week in 23 years last week as a drug-pricing and tariff deal with the US government helped ease an overhang that has been weighing on the sector for most of 2025.
The group’s advance was spurred by Pfizer on Sept 30 when it agreed to slash some of its drug prices for Americans enrolled in the Medicaid insurance programme in exchange for a three-year reprieve on import tariffs.
The New York-based company also agreed to invest US$70 billion (S$90.2 billion) in the US as part of an agreement with President Donald Trump.
The deal was seen as another sign of easing pressures on the pharmaceutical industry since he announced possible future tariffs on drug imports in April as well as drug-pricing reforms in May.
It followed the President’s move last week to exempt companies with US manufacturing from pharmaceutical levies in the first signal of relief for the sector.
The S&P 500 Pharmaceuticals Index rallied 11 per cent over the past five sessions, in its best weekly gain since July 2002 when drugmakers surged amid a flurry of positive news, including US Food and Drug Administration approvals and better-than-expected quarterly reports.
Prior to Sept 30, the group had been down about 3.4 per cent for the year.
All in all, Pfizer’s deal was “the second major ‘could have been a lot worse’ moment for the industry in recent days”, according to Mr Adam Crisafulli of Vital Knowledge.
“If the Pfizer deal from Tuesday (Sept 30) serves as the template for other large pharma and biotech companies, the worst-case scenario will have been avoided,” he added.
That is because Pfizer’s exposure to Medicaid is low and its agreement with Mr Trump to provide a most-favoured-nation pricing for the government programme is expected to have limited financial impact for the company in the near term.
While the deal is specific to Pfizer, many on Wall Street are betting that other drugmakers would follow Pfizer’s lead and make similar deals.
That will in turn soften any blows to the pharmaceutical industry’s profits from the aggressive drug pricing or tariff policies that the administration might impose.
Pfizer shares posted their biggest weekly gain in data going back to at least 1980 while Merck’s stock jumped roughly 14 per cent for its best week since March 2009.
They were in the red year-to-date prior to the deal, compared with the S&P 500 Index’s gain of about 13 per cent for the same period.
Other sectors are also benefiting from Pfizer’s deal. Life sciences companies that are involved with drug manufacturing also saw their shares climb last week, with the S&P Composite 1500 Life Sciences and Tools Index jumping by a record 15 per cent over the past five sessions.
Toolmakers, which get most of their revenue selling laboratory equipment and supplies that drug developers use to research, discover and produce new treatments, typically get hit hard by a slump in the healthcare sector. BLOOMBERG
[SRC] https://www.straitstimes.com/business/pharma-stocks-eye-best-week-in-16-years-as-trump-overhang-eases
