Trump wants to lower drug prices?
The recent weekend saw the USA and China deliver great news that reignited market optimism.
On Monday, the Asia-Pacific stock market collectively warmed up, Chinese assets surged across the board, A-shares in Hk strengthened collectively, and the offshore RMB briefly rose more than 200 points, while spot Gold suddenly fell.
However, just as the situation began to change, Trump remained the biggest factor disturbing the market.
Today, global pharmaceutical stocks are all falling, with the Japanese pharmaceutical Index dropping nearly 4%, Indian pharmaceutical stocks plummeting, and Hong Kong's biomedical stocks and Innovative Drugs all experiencing declines.
As of the time of writing, BEIGENE has plummeted over 9% in Hong Kong, ZAI LAB has dropped over 6%, WUXI XDC and AKESO have fallen over 5%; in A-shares, Maiwei Biotech has fallen over 13%, BEIGENE and Staidson have declined over 8%, and Shenzhen Salubris Pharmaceuticals and Beijing Hotgen Biotech Co.,Ltd have decreased over 6%.
Trump has set his sights on the Pharmaceutical sector again.
On Sunday evening local time, Trump issued an order to enforce a 'Global Minimum Price,' which will lower drug prices by 30% to 80%.
He announced on social media that this executive order is planned to be signed today (Monday at 21:00 Beijing time).
Trump claimed that this executive order would be 'one of the most important executive orders in American history,' expected to save hundreds of billions of dollars.
Enforcing the same prices for US prescription drugs as those in countries with global minimum prices is expected to lead to a nearly immediate drop in prescription drug and Pharmaceutical prices by 30% to 80%.
He believes this will 'unprecedentedly' lower the cost of Medical Care in the USA, while the price of drug exports from the USA will rise, resulting in an increase in global drug prices 'to achieve balance.'
For years, pharmaceutical companies have always claimed that this is due to R&D costs, and without justification, all these costs will be shouldered solely by the "suckers" in the USA.
"Political donations can create 'miracles,' but they don't work for me or the Republican Party. We want to do the right thing, so I am pleased to announce that tomorrow morning at 9 o'clock (Beijing time Monday 21 o'clock), I will sign an executive order at the White House that will have a profoundly far-reaching impact on American history. Prescription drug and pharmaceutical prices will nearly drop by 30% to 80% almost immediately. Global drug prices will rise to achieve balance, bringing fairness to the USA for the first time in years! I will implement a 'most favored nation' policy, under which the USA will pay the same price as the countries that pay the lowest prices in the world."
However, the specific details of the executive order have not yet been published.
Will drug prices 'collapse'?
A Trump storm, unforeseen by the American pharmaceutical industry, is powerfully approaching.
Last week, Trump was already warming up for drug pricing.
Previously, Trump signed an executive order to simplify the approval of pharmaceutical production facilities and encourage pharmaceutical companies to build factories in the USA. In addition, he also requested to 'accelerate the construction of facilities related to the production of pharmaceuticals and their ingredients.'
It is worth mentioning that the Trump administration has initiated a so-called Section 232 investigation on pharmaceutical imports, and he also plans to impose tariffs on imported pharmaceuticals in mid-May.
Once again, drug prices are being slashed, and tariffs are being increased; essentially, Trump wants to achieve: 'America First' in the supply chain.
However, under the immense pressure, American pharmaceutical companies have already organized to launch intense lobbying activities.
A spokesperson for the Pharmaceutical Research and Manufacturers of America stated that any form of government pricing would be detrimental to patients in the USA.
"Implementing foreign reference pricing in the Medical assistance program not only fails to save money for patients but may actually cause them to spend more."
According to estimates by PhRMA, the largest trade association in the pharmaceutical industry in the USA, Trump's proposed new drug pricing plan could result in losses of up to 1 trillion dollars for pharmaceutical companies over the next decade.
For innovative pharmaceutical companies venturing overseas, this could also lead to a decline in overseas revenue.
However, Sinolink previously pointed out that the Medical sector has seen a noticeable correction due to changes in the international tariff environment and fluctuations in geopolitical expectations.
However, this institution believes that the Medical sector has strong risk resistance and growth potential, and the geopolitical and tariff risks for the Innovative Drugs sector are very low, which will still be the growth mainline of the Medical sector. Continued bullish outlook for the growth potential of innovative drug symbols in A-shares and Hong Kong stocks.
