By Ankur Banerjee
SINGAPORE (Reuters) -Shares of European drugmakers slipped on Friday after U.S. President Donald Trump despatched letters to main pharmaceutical companies to chop drug costs in america, months after signing a sweeping government order geared toward reducing costs.
The letters got here as the most recent setback for a sector that is already grappling with the prospect of tariffs outlined within the U.S.-EU commerce deal, which some analysts estimate might add as a lot as $19 billion in annual prices.
Trump known as on 17 drugmakers to supply so-called most-favoured-nation costs to each affected person enrolled within the authorities Medicaid well being programme for low-income folks, and to ensure such pricing for brand new medicine.
Shares of European drugmakers Sanofi, AstraZeneca, GSK, Merck KGaA and Novo Nordisk slipped between 1% and 4% on Friday.
Novo’s 4% fall extends a selloff this week that began on Tuesday with a 28% plunge, wiping out $70 billion of the corporate’s market worth after the maker of weight-loss drug Wegovy issued a revenue warning and named a brand new CEO.
Its shares pared some losses after a report that the U.S. might pilot protection of weight-loss medicine beneath government-backed Medicare and Medicaid program. Rival Eli Lilly’s shares rose almost 2% in U.S. premarket hours.
The European healthcare index was down 0.7% by 1209 GMT after hitting its lowest since April earlier within the day.
The pharmaceutical firms that obtained the letters have till September 29 to reply with binding commitments to the phrases laid out by Trump.
Pfizer, Johnson & Johnson, Eli Lilly and Merck are among the many U.S. drugmakers that obtained the letters.
Shares of U.S. drugmakers Merck, J&J, Gilead, AbbVie and Pfizer moved marginally decrease premarket.
“Trump’s directive to the pharma firms will put them on the defensive and provides one more layer of uncertainty for the sector which might additionally face import tariffs in time to come back,” stated Vasu Menon, managing director of funding technique at OCBC.
“Whereas Trump has set a deadline for these firms to conform, it stays to be seen if that is exhausting coded or if he’ll roll again a few of his threats if these firms make an effort to have interaction him and soften his stance.”
Analysts, lobbyists and drug pricing specialists although stated it appeared unlikely that the pharmaceutical firms would adjust to Trump’s demand to decrease U.S. costs.
“It’s unlikely the Trump administration will have the ability to efficiently implement these insurance policies – in some instances probably missing authorized standing to execute on what he outlines,” stated BMO Capital analyst Evan Seigerman.
