European drugmakers saw a decline in their shares on Friday following U.S. President Donald Trump’s move to pressure major pharmaceutical companies to reduce drug prices in the United States. This latest development adds to the challenges already facing the sector, including the potential impact of tariffs outlined in the U.S.-EU trade deal, which could result in significant additional costs.
Trump’s letters to 17 drugmakers called for them to offer most-favored-nation prices to all patients enrolled in the government Medicaid health program and to ensure such pricing for new drugs. This directive led to a drop in the shares of European drugmakers such as Sanofi, AstraZeneca, GSK, Merck KGaA, and Novo Nordisk, with losses ranging from 1% to 4%. Novo Nordisk in particular experienced a 4% decline on Friday, following a sharp selloff earlier in the week that wiped out $70 billion of the company’s market value.
Despite the initial negative impact on European drugmakers, there was some relief as reports emerged suggesting that the U.S. could pilot coverage of weight-loss drugs under government-backed Medicare and Medicaid programs. This news led to a rise in rival Eli Lilly’s shares by nearly 2% in U.S. premarket hours.
The European healthcare index also took a hit, falling by 0.7% by midday, reaching its lowest point since April. The pharmaceutical companies that received Trump’s letters have until September 29 to respond with binding commitments to the terms laid out.
In the U.S., drugmakers like Pfizer, Johnson & Johnson, Eli Lilly, and Merck were among those who received similar letters from Trump. This led to marginal declines in the shares of U.S. drugmakers like Merck, J&J, Gilead, AbbVie, and Pfizer in premarket trading.
Analysts and industry experts expressed skepticism about the feasibility of Trump’s demand for lower drug prices, citing legal and logistical challenges. Despite this, some companies, including Pfizer, AbbVie, and Merck KGaA’s U.S. division, EMD Serono, expressed willingness to work with the administration.
Trump’s executive order in May aimed to align U.S. drug prices with those of other countries, prompting drugmakers to reconsider their pricing strategies. Swiss drugmaker Roche even considered selling prescription medicines directly to consumers in the U.S. to reduce costs for patients.
Overall, the pharmaceutical sector faces increased uncertainty and regulatory pressure, with companies navigating a complex landscape of pricing policies and trade agreements. It remains to be seen how drugmakers will respond to Trump’s demands and how these developments will shape the future of the industry.
