- Pharma stocks fall on Trump drug price pledge
- Measures could cost NHS billions
- Markets rally on US-China truce
On a day when ‘risk-on’ returned with a vengeance following a 90-day truce on tariffs between the US and China, the usually defensive healthcare sector was already on the back foot.
The sector was further whacked by president Trump’s proposed executive order on Sunday (11 May) to reduce prescription drug prices by between a third and 80% to give the US ‘most favoured nation’ pricing.
Asia saw the first impact overnight with firms like Japan’s Takeda (4502:TYO) falling over 5%.
The selling spread across to Europe with Danish obesity firm Novo Nordisk (NVO-B:CPH) leading the decliners, falling by as much as 7% while the UK’s AstraZeneca (AZN) dropped by around 4% and rival GSK (GSK) fell 3%. The Stoxx 600 healthcare sector fell by around 3%.
Meanwhile, stateside, leading weight-loss specialist Eli Lilly (LLY:NYSE) was indicated to open 3% lower in premarket trading with similar losses seen in Pfizer (PFE:NYSE), AbbVie (ABBV:NYSE), and Merck (MRK:NYSE).
Novo Nordisk shares were also impacted by new evidence that Lilly’s obesity drug Zepbound was superior to Novo’s Wegovy across five weight loss targets such as reduced waist circumference.
The head-to-head trial comparing the two leading weight loss treatments showed Zepbound helped nearly a quarter of patients lose more than 15% of their body weight compared with Wegovy.
This follows data released in December 2024 from a comparison study which showed Lilly’s drug induced greater weight loss.
PHARMAGEDDON
Gabriel Mckeown, head of macroeconomics at the Sad Rabbit newsletter, points out that the UK already has the lowest drug prices among international peers, which means Trump’s plan could cost the NHS billions in extra medication costs.
‘Just a 4% uplift in branded‑drug costs over the next spending‑review window would land a more than £1 billion blow to the NHS, as the Treasury tries to desperately reduce funding,’ explained Mckeown.
The thawing of trade relations between the US and China sparked sharp gains in equities with European markets climbing by nearly 2%, led by Danish logistics and shipping giant AL Moeller – Maersk (MAERSK-B:CPH), which gained 12.5%.
