Trump's price cuts threaten Roche and Novartis' billions in investments!

Trump's price cuts threaten Roche and Novartis' billions in investments!

Pressure on the U.S. pharmaceutical industry is intensifying with a new executive order from President Donald Trump aimed at lowering drug prices. This measure has a particular impact on the investment plans of the two Swiss pharmaceutical giants Roche and Novartis. Roche plans to invest about $50 billion in new factories and research laboratories over the next five years, while Novartis is targeting $23 billion in investments. The order requires pharmaceutical companies to adjust prices for brand-name drugs to levels in wealthy countries. This could lead to price reductions of between 50 and 90 percent, which will significantly influence companies' future plans.

However, analysts and legal experts warn that companies could face serious difficulties in implementing this policy. A key aspect of the order is the requirement that the US Department of Health and Human Services begin negotiations with pharmaceutical companies within 180 days. A list of target prices is also to be drawn up in the next 30 days, which will put additional pressure on companies. Lobby groups have already issued strong warnings about the risks of the MFN clause, which could have a significant impact on future investments.

Reactions of the pharmaceutical companies

Both companies are actively engaged in lobbying to influence U.S. government actions and build goodwill with the new administration. However, Trump's pricing policy could not only hinder investment intentions, but also endanger existing drug development projects. Roche has already announced that it will reduce the number of drug development projects and optimize its cost management.

As can be seen from the reports of MarketScreener As can be seen, Roche generates 54 percent of its pharmaceutical revenue in the USA. Novartis, also a major pharmaceutical manufacturing company, has greatly diversified its revenue distribution, with 42 percent of total revenue coming from the US market. This shows how important US politics is for the business development of the two companies.

Market situation and future prospects

Investment plans are under pressure from the upcoming price reductions being envisaged by the US government. Industry observers at UBS assume that the status quo in drug prices in the USA will remain in place for the time being, despite the regulatory changes. These uncertainties could have a major impact on market developments and the willingness to invest in the long term.

Currently, Novartis has a last close price of $107.09, with a median price target of $118.27. This highlights the corporate pressures on the two pharmaceutical companies, both of which play a significant role in global healthcare.