LIVE MARKETS-Pharma faces U.S. pricing fog, not earnings shock – UBS
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PHARMA FACES U.S. PRICING FOG, NOT EARNINGS SHOCK – UBS
UBS expects sentiment across the pharma space to remain subdued following President Donald Trump's latest push to slash prescription drug prices to match those paid overseas, under the so-called most-favoured nation (MFN) policy.
CIO Equity Strategist Eric Potoker at the Swiss bank points to the "imposing and threatening" tone of letters Trump sent last week to CEOs of 17 major drugmakers, demanding they match U.S. prices to the lowest levels in other wealthy nations.
The letters, issued under an executive order signed in May, gave companies 60 days to comply or face potential executive action. However, with no legislative backing and vague implementation details, UBS sees uncertainty lingering through late September, when the deadline expires.
Despite the aggressive rhetoric, the financial impact appears limited. The proposal mainly targets Medicaid, which already benefits from deep rebates. UBS estimates the hit to industry operating income globally at less than 5%.
"Obviously, without details, any estimate has wide error bars," Potoker says.
For more on uncertainty gripping pharma investors: Five years after COVID, pharma shares languish in US policy limbo
(Danilo Masoni)
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