Pfizer's Trump Deal: Drug Price Cuts, Tariff Exemption Boosts Stock 14%
Pfizer (PFE) has inked a substantial agreement with President Trump, becoming the first pharma company to secure a deal on drug pricing and import tariffs. The pact has driven Pfizer's stock market value up by 14% over just two trading sessions.
Under the terms, Pfizer has committed to launching new medicines at prices on par with other developed markets. This means patients with prescriptions will gain access to Pfizer's drugs via a direct purchasing platform. In exchange, Pfizer has secured a three-year exemption from import tariffs, which could cut costs and potentially bolster profit margins.
The agreement also involves Pfizer ramping up investment in U.S. manufacturing and pledging $70 billion for research and development, as well as capital projects. Notably, the price cuts do not extend to complex and costly drugs like oncology treatments. Despite the deal, Pfizer's stock remains relatively affordable, trading at just 8x forward earnings estimates.
Pfizer has agreed to slash prices of most of its primary care treatments by an average of 50%, with some cuts as high as 85%. This deal not only benefits patients but also mitigates the risk of severe government intervention on drug pricing for Pfizer. With the three-year exemption from import tariffs, Pfizer's financial performance could potentially improve, making its stock more appealing to investors on slickdeals.
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