Pfizer – TrumpRx deal boosts Big Pharma to a record rally

[President Trump Delivers An Announcement From The Oval Office]
Win McNamee/Getty Images News

The world’s biggest pharma companies recorded their best weekly performance in years on Friday after Pfizer (NYSE:PFE [https://seekingalpha.com/symbol/PFE]) reached a landmark drug pricing deal with the U.S. government, agreeing to sell its brand-name drugs on the newly launched direct-to-consumer site TrumpRx at sharply lower prices.

The New York-based pharma giant rallied ~15% this week, its best weekly gain in decades, after announcing the agreement under which the Trump administration has also granted it a three-year reprieve on tariffs in exchange for additional investments in the U.S. [https://seekingalpha.com/news/4500308-trumprx-unveiled-85-discount-pfizer-drugs]

While the S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) rose ~1%, its healthcare components added ~7%, as the sector became the best performer this week, thanks mainly to gains of ~15% and ~11% among biotech and pharmaceutical stocks, respectively.

Meanwhile, VanEck Vectors Pharmaceutical ETF (NASDAQ:PPH [https://seekingalpha.com/symbol/PPH]), which represents 25 leading global drug stocks, jumped ~8%, its best weekly advance since April 2020, as President Donald Trump indicated that more pharma companies are weighing similar pricing deals with the White House. [https://seekingalpha.com/news/4500294-trump-seeks-more-drug-pricing-deals-similar-pfizers]

Eli Lilly (NYSE:LLY [https://seekingalpha.com/symbol/LLY]) ended up ~16% higher, recording its highest weekly gain since August 2023, after a White House spokesperson said that the Indiana-based drugmaker is also in active discussions with the administration to offer its drugs on TrumpRx with sharp discounts. [https://seekingalpha.com/news/4500325-eli-lilly-discussions-white-house-trumprx-deal]

In addition to LLY and PFE, other PPH components to record sharp weekly gains included AstraZeneca (NASDAQ:AZN [https://seekingalpha.com/symbol/AZN]), Merck (MRK [https://seekingalpha.com/symbol/MRK]), Sanofi (SNY [https://seekingalpha.com/symbol/SNY]), GSK (GSK [https://seekingalpha.com/symbol/GSK]), Organon (OGN [https://seekingalpha.com/symbol/OGN]), Novo Nordisk (NVO [https://seekingalpha.com/symbol/NVO]), Novartis (NVS [https://seekingalpha.com/symbol/NVS]), J&J (JNJ [https://seekingalpha.com/symbol/JNJ]), Bausch Health (BHC [https://seekingalpha.com/symbol/BHC]), and Bristol Myers (BMY [https://seekingalpha.com/symbol/BMY]).

With the VanEck Pharma ETF (NASDAQ:PPH [https://seekingalpha.com/symbol/PPH]) having added only ~9% this year compared to the ~14% rise in the S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]), Wall Street analysts attributed the rally to the recent underperformance of the beaten-down sector.

Big Pharma has come under pressure in recent months amid Trump’s tariff threats and his executive order in May, which called on drugmakers to lower their U.S. prices in line with those in other developed nations under his most-favored-nation drug pricing (MFN) policy. [https://seekingalpha.com/news/4475851-trump-issues-60-day-ultimatum-for-big-pharma]

With pharma stocks in general trading at a ~45% - 50% discount to the broader market, the Pfizer (NYSE:PFE [https://seekingalpha.com/symbol/PFE]) – U.S. deal “may act as a clearing event for the sector,” JPMorgan analyst Chris Schott argued. “We would not be surprised to see a number of similar agreements to help remove uncertainty on MFN/tariffs,” he added.

MORE ON PFIZER, VANECK PHARMACEUTICAL ETF, ETC.

* Why Eli Lilly Is The Lion's Share Of My Portfolio [https://seekingalpha.com/article/4827600-eli-lilly-stock-will-capture-outsized-demand-major-part-my-portfolio]
* PPH: The Big Pharma ETF [https://seekingalpha.com/article/4827433-pph-big-pharma-etf]
* Pfizer: The Long Suffering Is Finally Over (Rating Upgrade) [https://seekingalpha.com/article/4827401-pfizer-long-suffering-finally-over]
* INCY and ABBV lead S&P 500 healthcare gainers in Q3; MOH and ALGN lag [https://seekingalpha.com/news/4500406-incy-and-abbv-lead-sp-500-healthcare-gainers-in-q3-moh-and-algn-lag]
* Novo’s Wegovy and Lilly’s Zepbound recommended in Europe as first-line obesity treatments [https://seekingalpha.com/news/4501280-novos-wegovy-lillys-zepbound-touted-first-line-obesity-drugs]