Pharmaceutical Stocks Tumble as Trump Plans US Drug Price Cuts

(Bloomberg) — Shares of pharmaceutical companies fell across Europe and Asia after President Donald Trump said he planned to order a cut in US prescription drug costs to bring them in line with other countries.

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In Europe, obesity-drug maker Novo Nordisk A/S fell as much as 8.6% at the open, one of the steepest decliners in the Stoxx 600 Health Care Index, which slid 3.3%.

Drugmakers were the worst-performing sector in Japan on Monday, dragging the benchmark Topix lower despite hopes of a US-China trade deal broadly boosting markets across Asia. Chugai Pharmaceutical Co. plunged as much as 10%, the most since February 2024, with peers Daiichi Sankyo Co. sliding 7.8% to the day’s low and Takeda Pharmaceutical Co. losing over 5%.

Meanwhile in Hong Kong, BeiGene Ltd. tumbled as much 8.8% and Innovent Biologics Inc. dropped 6.4%. In South Korea, SK Biopharmaceuticals Co., Celltrion Inc. and Samsung Biologics Co. all fell over 3%. India’s Sun Pharmaceutical Industries Ltd. lost 7% at one point, with Lupin Ltd. and Aurobindo Pharma Ltd. falling around 3%

The declines come after Trump said on social media he intends to sign an executive order lowering the price of prescription medicines at 9 a.m. on Monday in Washington, after reports emerged of the plan last week. The announcement is pressuring drug-related stocks, on worries their profits will take a hit if they have to reduce prices in the US.

“This has the potential to be very negative for the industry,” Bank Vontobel analyst Stefan Schneider said in a note, adding that the plan will probably be directed at Medicare, Medicaid and some hospitals. “Such a move will likely face lawsuits by the industry,” Schneider said.

READ: Trump Seeks to Align US Drug Costs With Cheapest Ones Abroad

Although the feasibility of Trump’s plan is “questionable,” his announcement is negative for the pharmaceutical sector, Hidemaru Yamaguchi, a health-care sector analyst at Citigroup Global Markets Japan Inc., wrote in a note.

Firms that depend on the US for a large chunk of sales, including Japan’s Takeda, Astellas Pharma Inc. and Otsuka Holdings Co., are especially vulnerable, he added. Shares of Astellas and Otsuka also lost over 4% Monday.

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Americans pay the most in the world for medicines, fueling innovation and driving the growth of the industry. Drugmakers have said revamping the system will slash revenue and stifle the development of breakthrough therapies that have the potential to lengthen and improve lives.

Trump cited the industry’s argument, but said it meant that “the ‘suckers’ of America” ended up bearing those costs “for no reason whatsoever.” His social media post didn’t detail how the order would work, or any limits that may apply.

It’s not the first time Trump has targeted high drug costs. His current plan seems similar to one proposed during his first term aimed at capping Medicare drug prices, Stephen Barker, an equities analyst at Jefferies Japan Ltd. wrote in a note.

The effort was struck down in federal court after drug companies challenged it, claiming the administration hadn’t properly carried out the rule-making process.

Still, a renewed push to lower drug prices may have an “enormous” impact on the sector’s revenues, Barker said. That’s because Medicare, a government-funded program that offers health insurance for people aged 65 or older, and Medicaid, which covers low-income citizens, may collectively account for about 40% of all drug sales in the US, he said.

In Japan, Astellas, Ono Pharmaceutical Co., Sumitomo Pharma Co., Shionogi & Co. and Eisai Co. may be at risk, according to Barker.

The US government already negotiates prices for some of the highest-cost medicines used in Medicare under the Inflation Reduction Act, which was passed in 2022 under former President Joe Biden, with more slated to be added every year.

Trump’s plan likely only affects the drugs up for price negotiations under the IRA, said Evan Seigerman, head of health-care research at BMO Capital Markets. “Importantly, the government has no power to set prices in the commercial market,” and potentially faces resistance from House Republicans to implementing legislation beyond what can be done via the executive order, he said.

–With assistance from Charlotte Yang, Amber Tong, Alex Gabriel Simon, Allegra Catelli and David Watkins.

(Updates share moves throughout)

Pharmaceutical Stocks Tumble as Trump Plans US Drug Price Cuts

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