A deal has just been struck that could turn the entire pharmaceutical sector upside down. I’m talking, of course, about the Trump–Pfizer agreement, which is not just a simple deal: it is a strategic transformation of the entire U.S. pharmaceutical market.
THE AGREEMENT
Donald Trump announced yesterday a massive agreement with Pfizer . And when I say massive, I mean it. It involves discounts ranging from 50% to even 100% (yes, you read that right) on well-known Pfizer drugs, which will also be available through a special state platform, TrumpRx, for direct consumer purchase—no insurance or prescriptions needed.
And all this under the “most-favored-nation” policy, meaning that America should pay the lowest prices available for the same drug in developed countries. For the first time, Medicaid and Medicare prices will be aligned with those in Europe and elsewhere. This means that patients in the U.S. public healthcare system will have access to the same drugs as someone in Germany or France, but at much lower prices than today.
But that’s not all. Pfizer also agreed to invest $70 billion to repatriate production and research activities to the U.S. We’re talking about massive factories and R&D hubs moving back to American soil. In exchange, the company secures a three-year period free of pharmaceutical tariffs, provided it continues investing domestically.
Trump himself stated bluntly: “If there’s no deal, tariffs are coming.” He has already sent letters to 17 pharmaceutical giants—including Merck, J&J, AbbVie, Bristol Myers—issuing a strict 60-day ultimatum to cut prices, or else… they’ll pay.
THE SECTOR IN CRISIS
So, what’s Trump aiming for? Quite simply, he wants to force pharma companies to align with his administration’s new economic narrative: lower costs for the state, access for everyone, and American-made production. And so far, he seems to be succeeding. But, as you’d expect, this comes with consequences.
Because while we’re discussing all this, the entire pharmaceutical sector… is bleeding. In 2025, the S&P 500 health index has fallen -1.21%, while the broader index has gained over 13.2%.
That nearly 12% gap is huge, and it’s driven by a series of factors:
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Government pressure to cut prices
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Uncertainty around new tariffs
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Cuts to research, Medicaid, and funding
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Regulatory instability and political pressure
This uncertainty has triggered massive outflows from healthcare ETFs. Specifically, $11.5 billion have been pulled out in just one year. To put that in perspective, the total market cap of the S&P 500 healthcare sector is about $4.8 trillion—barely above the market cap of a single company, Nvidia.
And yet, this storm might actually be the buy signal for some. Many big investors are starting to take positions. Why? Because valuations are extremely low.
The sector has underperformed the S&P 500 for three straight years.
P.S I don't like Trump but i have to give it to him, if this agreement goes forward as it is those are good new for the every day U.S citizen. But companies don't just lower prices that can affect their bottom line that easily.
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