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Trump's prescription for drugs
FinSnap OG
May 13, 2025
“Therefore, I am pleased to announce that tomorrow morning, in the White House, at 9:00 A.M. on Monday, we will reduce pharmaceutical prices by 30% to 80%.” This is the post Donald Trump shared on Truth Social before signing the “most consequential executive orders,” according to Trump.
What’s on the executive order?
In May 2025, Donald Trump introduced an executive order to cut down the drug price significantly for US citizens. Trump stated that global pharma provides large discounts to foreign lands and overcharges American pockets by charging them 2 to 3 times more to fill the difference. Trump announced this system as a "global freeloading scheme" and wants Americans to pay the lower price—the price other countries are paying.
What’s been the impact on the market?
The executive order exclusively mentions that it will facilitate the consumers purchasing drugs directly from the manufacturer, minimizing the involvement of middlemen such as wholesalers, pharmacy benefit managers, and insurance companies. It could potentially affect companies such as McKesson, one of the largest drug distributors (down by 0.86%), AmerisourceBergen (up by 0.22%), and insurers such as CVS (down by 3.23%). On the other hand, pharmaceutical stocks are enjoying escalation as of now. Pfizer (up by 3.61%), Merck & Co. (up by 5.87%), and AbbVie (up by 2.96%). The outlier is Johnson & Johnson (down by 0.05%).
What’s the position of top pharma firms?
They knew it was going to happen. Trump expressed multiple times how he wants to re-structure the pharma industry. Perhaps that's why top players like AbbVie, Merck, and Roche decided to invest billions to build new plants, produce new biological drugs, and expand manufacturing facilities to other states. Pfizer is skeptical, and the CEO also expressed tariff uncertainties, holding back further investments.
What should you be careful about?
In 2020, Trump wanted to leverage the government's buying power to force drug companies to charge similar prices as those of most favored nations. At that time, it faced heavy backlash and eventually faced lawsuits from pharmaceutical companies. It is expected that they will do the same this time as well; otherwise, what’s the point of appointing so many lawyers? For now, avoid the noise, be patient, and don’t rush to sell your stocks.
What’s the damage?
Pharma companies are obliged to set the price within 90 days; otherwise, they are warned with potential actions to be taken. In an aggressive tone, he also said if drug companies do not cooperate, then he would make the trade more difficult for them, crack down with antitrust law, and even threaten to import drugs at a lower cost, which could potentially kill their profits.
What’s for Bangladesh?
Increase in drug price: Bangladesh is under Most Favored Nation, and average citizens receive drugs at a way lesser cost compared to average US citizens. If top pharmaceutical giants are forced to cut costs in the USA, then they have to compensate for the loss by increasing prices for countries like Bangladesh.
Little impact on exports: Bangladesh exports $21 million worth of drugs to the USA out of its $208 billion imports. The fraction is significantly less, but it could still hamper the emerging potential of the pharmaceutical market of Bangladesh and increase its footing in Africa and Europe.
Financial outlook: Beximco is the only company whose export share to foreign countries is almost 10%, and it exports to 50 countries, and the US is one of them. The rest of the 90% comes from the local market. Same story for ACI, Square Pharma, and Renata, as their export share in the US is much less. If this order gets executed, it is unlikely that pharma stocks in BD will be shaken to the core.