US Pfizer deal powers European health stocks as Trump policy haze clears

European healthcare stocks jumped on Wednesday, mirroring moves in the United States, propelled by a deal between Pfizer and President Donald Trump to lower prescription drug prices in the Medicaid programme in exchange for tariff relief.

The agreement, seen as less punishing than some within the industry had feared, gives hard-hit global drugmakers a degree of clarity after a volatile year during which Trump has taken aim at the sector over high U.S. medicine prices.

The Pfizer deal is expected to break the seal for other agreements as companies look to hand Trump pricing wins in return for lower tariffs on their drugs to enter the huge U.S. market, investors, company insiders and lobbyists said.

"We expect EU pharma to follow suit and negotiate with the Trump administration for exemptions," said Lucy Coutts, investment director at wealth managers JM Finn, which holds shares in GSK, AstraZeneca, Roche and Novo Nordisk.

She said this would likely be in the form of investment in U.S. manufacturing and participation in TrumpRX, a website being launched by Trump for Americans to buy drugs at a discount.

SHOT IN THE ARM FOR PHARMACEUTICAL SHARES
Trump sent letters to 17 leading drug companies in July telling them to slash prices to match those paid overseas. He asked them to respond with binding commitments by September 29. Pfizer is the first drugmaker to announce a deal.

U.S. patients currently pay far more for prescription medicines, often nearly three times more than in other developed nations, and Trump has been pressuring drugmakers to lower their prices to what patients pay elsewhere.

On Wednesday, Europe's healthcare sector index cheered the Pfizer deal, soaring 4.3%, on track for its biggest daily gain in around five years. The index is down 1.4% so far this year.

Among the stocks of pharmaceutical companies and their suppliers, Ambu surged over 10%, Sartorius 7%, and Merck, Roche and AstraZeneca all climbed around 8%. Novo Nordisk and Novartis gained 5% and 3.5% respectively.

Pfizer shares had risen 7% on Tuesday in the United States, while other U.S. pharma stocks also gained.

Shore Capital analyst Sean Conroy said clarity was beginning to emerge on the potential impact of the Trump administration's "most-favoured-nation" drug pricing proposal and things looked "far less draconian than feared".

"The announcement yesterday offers some relief to the market," HSBC analyst Rajesh Kumar said. "(It) may suggest that the deals are now being closed with the U.S. administration offering a path for resolution of the overhang."

COMPANIES IN 'CONSTRUCTIVE' TALKS WITH US ADMINISTRATION
Britain's GSK, maker of HIV drugs and vaccines, said it was having constructive conversations with the Trump administration over drug pricing. Germany's Merck KGaA , which makes cancer drugs, said similar.

Roche said that it and its U.S. unit Genentech remained committed to working with the Trump administration towards strengthening U.S. manufacturing and making medicines more affordable for patients there.

Novo Nordisk, the Danish firm that makes the Wegovy weight-loss injection, said it was in talks with the Trump administration over the "most-favoured-nation" executive order.

Novartis said it remained committed to finding constructive solutions that lower costs for Americans and address price disparities between the U.S. and other high-income countries.

Berenberg analysts estimated that a 50% reduction in Medicaid sales, which account for about 3% of large pharma revenues, would hit sector earnings per share by an average of 4%, with the biggest impact at GSK at around 7% and the smallest at Pfizer at about 1%.

"We believe that now if the companies are investing in the U.S. they should be on the safe side," Bernstein analyst Florent Cespedes said, adding that European firms had announced about $200 billion in U.S. investments.

Angelo Meda, head of equities at Banor SIM in Milan, said 2025 was meant to have been a year of expansion for drugmakers, but this had been hit by tariffs. The deal was a relief.

"Any positive news on that front can breathe new life into a sector that is currently trading at relative lows compared to the broader market," he said.