The Zhitong Finance App learned that after falling to a high level in the last few months of 2024, European healthcare stocks are facing the risk of US politics and high-risk new drug trial results in the new year. According to the data, the Stoxx 600 Health Care Index (Stoxx 600 Health Care Index) has fallen 12% since reaching a record high at the end of August. In September, healthcare was also the best-performing sector in the European stock market since this year. The key factor is that Danish pharmaceutical giant Novo Nordisk (NVO.US) has taken back some of its share price increases.

For investors in European healthcare stocks, the key is the clarity of US healthcare policies. Earlier, US President-elect Trump nominated Robert Kennedy Jr., a famous vaccine skeptic, as the next US Secretary of Health and Human Services, triggering a wave of sell-offs in European healthcare stocks.

Gregoire Biollaz, senior investment manager at Pictet Asset Management, said that the US political landscape “may have a significant impact, at least in terms of market sentiment.” He added, “As far as fundamental changes are concerned, will we see something happen in 2025? There is still a lot of uncertainty associated with this, and the healthcare system itself is challenging.”

European healthcare stocks had strong gains in part because they were attractive against the background of the European economic downturn, and the fervor for diet pills also boosted valuations. However, this rally has come to a standstill as investors increasingly worry about the future of US policy.

According to the data, the six pharmaceutical companies with the highest market capitalization in Europe last year generated about 40% to 55% of their revenue from the US. Barclays Bank analyst Emily Field believes that as we enter 2025, the European pharmaceutical industry will face “more challenging prospects.” HSBC analysts, including Rajesh Kumar, said that if the US market is excluded, then the economic benefits of drug development will not increase.

Andy Acker and Dan Lyons of asset management firm Janus Henderson Investors said, “As we enter 2025, investors should be prepared for continued volatility.” “We also think now is a good time to focus on companies that raise standards of patient care or improve healthcare system outcomes and efficiency.”

J.P. Morgan analysts believe that concerns about the impact of the new US administration on the European pharmaceutical industry will gradually disappear by 2025. They said in a report that any impact on the pricing of government-funded vaccines or drugs is limited, and “this may also moderately help the industry grow.”

In addition to political factors, analysts believe that test results for drug development will be the focus of next year, especially at a time when pharmaceutical companies' key drugs are about to lose patent protection. According to J.P. Morgan analysts, Novo Nordisk, AstraZeneca (AZN.US), and Novartis Pharmaceuticals (NVS.US) have “the most pipeline information flow and the highest probability of success.” In contrast, they believe that GlaxoSmithKline (GSK.US)'s “information flow is limited,” and Roche's new drug data next year will not be successful.

Intron Health analyst Naresh Chouhan said that key trial results across the industry — particularly in areas where late-stage research success is uncertain but sales potential is huge — will determine who will be the winner in 2025. However, Naresh Chouhan urged investors to act with caution. The data shows that despite the recent decline, the expected price-earnings ratio of the Stoxx 600 Healthcare Index is still around 16 times, which is about 20% higher than the European benchmark stock index. “The industry has rapidly become very complex, mainly because valuations have become very high, so any setback will have a significant impact on stock prices,” he said.