Trump signs executive order to cut US drug prices, global pharmaceutical shares react mixed.

From Financial Modeling Prep: 2025-05-13 03:10:00

Global pharmaceutical shares reacted mixed on Monday after President Trump signed an executive order to cut U.S. prescription drug prices by 30%-80%, aligning them with other high-income countries. U.S. drugmakers anticipated the move, while European and Asian names trading heavily on U.S. revenues saw renewed swings.

The executive order enforces “Most-Favored-Nation” pricing, limiting Medicare to pay no more than the lowest price any comparable nation pays for the same drug. Trump’s rationale is that the U.S. has <5% of the global population but generates ~75% of Big Pharma's revenues. Immediate market impact: Novo Nordisk down 1% at open, recovered later. Eli Lilly remained flat on the day, off session lows. U.S. innovators like BMY, PFE, MRK rose 2%-4% following the open as the move was widely expected. Analysts at Vital Knowledge warn that the order may face legal and political pushback and could be negative for the pharma/biotech sector. Brokers are reassessing price targets and recommendations for major drugmakers, both U.S. and global, in response to the executive order. Investors should watch for regulatory clarifications from HHS and CMS on which drugs and purchase programs are covered. Legal challenges from industry groups could delay implementation and impact stock swings. Earnings commentary during Q2 calls will provide insight into management’s updated pricing, volume, and margin assumptions. By monitoring real-time analyst rating changes and upcoming regulatory milestones, investors can navigate the volatility and identify pharmaceutical franchises best positioned to withstand the pricing overhaul.


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