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3 Large Drug Stocks to Watch as Industry Recovers After PFE-Trump Deal
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Key Takeaways
Pfizer's deal with Trump cuts drug prices, boosts U.S. investment and lifts pharma sector sentiment.
Investor optimism grows as major drugmakers eye similar tariff-free pricing agreements with Trump.
J&J, Bayer and Novartis show strong growth momentum, making them attractive pharma investment picks.
Late last month, Pfizer (PFE - Free Report) announced a landmark deal with the Trump administration to cut drug prices and expand U.S. innovation and manufacturing.
Under the deal, Pfizer agreed to slash prices of some of its drugs to align their cost with those in comparable developed countries, supporting President Trump’s Most Favored Nation (MFN) pricing proposal. The company will also offer significant discounts on key treatments through the new direct purchasing platform, TrumpRx.gov.
In exchange, Pfizer will receive a three-year exemption from tariffs on pharmaceutical imports if it increases U.S. manufacturing investment. To that end, Pfizer has committed an additional $70 billion over the coming years to strengthen its U.S. research and production footprint.
Pfizer’s drug-pricing deal with Trump seems to have alleviated the two biggest concerns surrounding the drug and biotech industry this year – tariff and MFN pricing.
The goal of Trump’s proposed MFN pricing policy is to ensure that U.S. consumers pay the same price for some prescription drugs as in some comparably developed nations. It is feared that such a policy, if implemented, can hurt prices and reimbursement of prescription drugs.
As regards tariff, President Trump had threatened to impose heavy tariffs, as high as 250%, on pharmaceutical imports. Trump’s repeated threats to impose tariffs on pharmaceutical imports were aimed at pushing American pharma companies to shift pharmaceutical production back to the United States, primarily from European and Asian countries.
The PFE-Trump deal set off a surge in stocks of large drug stocks like Merck (MRK - Free Report) , AstraZeneca, AbbVie and Eli Lilly, among others, as these drugmakers could be the next in line to sign similar deals with the Trump administration. Many of the large drugmakers have already committed to investing billions to boost domestic investments.
The deal, along with a recent surge in M&A activity, has improved investor outlook toward the pharma sector, which has struggled this year due to tariff and pricing fears and broader macro headwinds. The deal between Pfizer and Trump has raised hopes of a sustainable sector recovery, as Trump offers to hold off the tariffs on pharmaceutical imports to sign similar deals with other drugmakers
The SPDR S&P Biotech exchange-traded fund (XBI) is up 9.2% in a month and 15.1% YTD. The Large Cap Pharma sector has risen 8.4% in a month and 8.1% YTD.
Image Source: Zacks Investment Research
With the drug/biotech industry riding high, we discuss three large drugmakers, J&J (JNJ - Free Report) , Bayer (BAYRY - Free Report) and Novartis (NVS - Free Report) , which can prove to be great inclusions in your portfolio. These companies have seen their stock prices rise this year, as seen in the chart below.
Image Source: Zacks Investment Research
Bayer’s Pharmaceuticals Unit Driving Growth
Bayer’s key drugs, Nubeqa for cancer and Kerendia for chronic kidney disease associated with type II diabetes, are fueling growth in its Pharmaceuticals division, making up for the decline in sales of oral anticoagulant Xarelto. Bayer is also working to expand the labels of Nubeqa and Kerendia, which, if successful, can further drive growth.
The company also plans to launch two new drugs in 2025 — elinzanetant, a hormone-free treatment for menopause symptoms, and acoramidis, a drug for the treatment of a specific form of heart disease.
The Crop Science business also posted an increase in sales in the second quarter after being under pressure over the past few quarters. The Consumer Health segment was soft in the first half of 2025.
Estimates for its 2025 earnings per share have increased from $1.28 to $1.33 over the past 90 days, while those for 2026 have increased from $1.35 per share to $1.38 per share.
J&J’s Innovative Medicine Unit Strong, MedTech Improving
J&J’s Innovative Medicine unit, which makes drugs, is showing a growth trend, despite the loss of exclusivity (LOE) of blockbuster drug, Stelara, and the negative impact of the Part D redesign. J&J expects continued growth in the second half of 2025 to be driven by its key products such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey and new indications for Tremfya and Rybrevant. J&J’s MedTech segment sales improved in the second quarter from the first-quarter levels, driven by Cardiovascular, Surgery and Vision, which are likely to drive growth in the second half too.
J&J is also rapidly advancing its pipeline, attaining significant clinical and regulatory milestones that will help accelerate growth through the back half of the decade. J&J has also been on an acquisition spree, with the latest acquisition of Intra-Cellular Therapies strengthening its presence in the neurological and psychiatric drug market.
J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half than in the first.
J&J has a Zacks Rank #2 (Buy).
The stock has risen 30.6% year to date. The Zacks Consensus Estimate for 2025 earnings has risen from $10.62 per share to $10.86 per share, while that for 2026 has risen from $11.00 per share to $11.37 per share over the past 90 days.
Key Drugs Boost Novartis’ Top-Line Growth
With the separation of Sandoz, Novartis has become a pure-play pharmaceutical company. Its performance has been good in the last few quarters. Novartis maintains strong momentum on the back of a strong and diverse portfolio with drugs like Kisqali, Kesimpta, Pluvicto and Leqvio. The uptake of Pluvicto and Scemblix has been outstanding and should propel top-line growth. Approval of new drugs and label expansion of existing drugs should enable Novartis to offset the adverse impacts of the generic competition of key drugs.
Novartis is also looking to solidify its presence in the promising gene therapy space. The recent spate of acquisitions and collaborations has strengthened its pipeline. However, generic erosion of some drugs and recent pipeline setbacks are a concern. One of its top drugs, Entresto, is likely to lose patent protection.
Novartis has a Zacks Rank #3 (Hold) at present. The Zacks Consensus Estimate for this Swiss drugmaker’s 2025 EPS has increased from $8.92 to $9.03 over the past 90 days, while that for 2026 has risen from $9.27 to $9.41 during the same timeframe. The stock has risen 35.2% so far this year.
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3 Large Drug Stocks to Watch as Industry Recovers After PFE-Trump Deal
Key Takeaways
Late last month, Pfizer (PFE - Free Report) announced a landmark deal with the Trump administration to cut drug prices and expand U.S. innovation and manufacturing.
Under the deal, Pfizer agreed to slash prices of some of its drugs to align their cost with those in comparable developed countries, supporting President Trump’s Most Favored Nation (MFN) pricing proposal. The company will also offer significant discounts on key treatments through the new direct purchasing platform, TrumpRx.gov.
In exchange, Pfizer will receive a three-year exemption from tariffs on pharmaceutical imports if it increases U.S. manufacturing investment. To that end, Pfizer has committed an additional $70 billion over the coming years to strengthen its U.S. research and production footprint.
Pfizer’s drug-pricing deal with Trump seems to have alleviated the two biggest concerns surrounding the drug and biotech industry this year – tariff and MFN pricing.
The goal of Trump’s proposed MFN pricing policy is to ensure that U.S. consumers pay the same price for some prescription drugs as in some comparably developed nations. It is feared that such a policy, if implemented, can hurt prices and reimbursement of prescription drugs.
As regards tariff, President Trump had threatened to impose heavy tariffs, as high as 250%, on pharmaceutical imports. Trump’s repeated threats to impose tariffs on pharmaceutical imports were aimed at pushing American pharma companies to shift pharmaceutical production back to the United States, primarily from European and Asian countries.
The PFE-Trump deal set off a surge in stocks of large drug stocks like Merck (MRK - Free Report) , AstraZeneca, AbbVie and Eli Lilly, among others, as these drugmakers could be the next in line to sign similar deals with the Trump administration. Many of the large drugmakers have already committed to investing billions to boost domestic investments.
The deal, along with a recent surge in M&A activity, has improved investor outlook toward the pharma sector, which has struggled this year due to tariff and pricing fears and broader macro headwinds. The deal between Pfizer and Trump has raised hopes of a sustainable sector recovery, as Trump offers to hold off the tariffs on pharmaceutical imports to sign similar deals with other drugmakers
The SPDR S&P Biotech exchange-traded fund (XBI) is up 9.2% in a month and 15.1% YTD. The Large Cap Pharma sector has risen 8.4% in a month and 8.1% YTD.
Image Source: Zacks Investment Research
With the drug/biotech industry riding high, we discuss three large drugmakers, J&J (JNJ - Free Report) , Bayer (BAYRY - Free Report) and Novartis (NVS - Free Report) , which can prove to be great inclusions in your portfolio. These companies have seen their stock prices rise this year, as seen in the chart below.
Bayer’s Pharmaceuticals Unit Driving Growth
Bayer’s key drugs, Nubeqa for cancer and Kerendia for chronic kidney disease associated with type II diabetes, are fueling growth in its Pharmaceuticals division, making up for the decline in sales of oral anticoagulant Xarelto. Bayer is also working to expand the labels of Nubeqa and Kerendia, which, if successful, can further drive growth.
The company also plans to launch two new drugs in 2025 — elinzanetant, a hormone-free treatment for menopause symptoms, and acoramidis, a drug for the treatment of a specific form of heart disease.
The Crop Science business also posted an increase in sales in the second quarter after being under pressure over the past few quarters. The Consumer Health segment was soft in the first half of 2025.
This Zacks Rank #1 (Strong Buy) company’s shares have risen 65.5% so far this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for its 2025 earnings per share have increased from $1.28 to $1.33 over the past 90 days, while those for 2026 have increased from $1.35 per share to $1.38 per share.
J&J’s Innovative Medicine Unit Strong, MedTech Improving
J&J’s Innovative Medicine unit, which makes drugs, is showing a growth trend, despite the loss of exclusivity (LOE) of blockbuster drug, Stelara, and the negative impact of the Part D redesign. J&J expects continued growth in the second half of 2025 to be driven by its key products such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey and new indications for Tremfya and Rybrevant. J&J’s MedTech segment sales improved in the second quarter from the first-quarter levels, driven by Cardiovascular, Surgery and Vision, which are likely to drive growth in the second half too.
J&J is also rapidly advancing its pipeline, attaining significant clinical and regulatory milestones that will help accelerate growth through the back half of the decade. J&J has also been on an acquisition spree, with the latest acquisition of Intra-Cellular Therapies strengthening its presence in the neurological and psychiatric drug market.
J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half than in the first.
J&J has a Zacks Rank #2 (Buy).
The stock has risen 30.6% year to date. The Zacks Consensus Estimate for 2025 earnings has risen from $10.62 per share to $10.86 per share, while that for 2026 has risen from $11.00 per share to $11.37 per share over the past 90 days.
Key Drugs Boost Novartis’ Top-Line Growth
With the separation of Sandoz, Novartis has become a pure-play pharmaceutical company. Its performance has been good in the last few quarters. Novartis maintains strong momentum on the back of a strong and diverse portfolio with drugs like Kisqali, Kesimpta, Pluvicto and Leqvio. The uptake of Pluvicto and Scemblix has been outstanding and should propel top-line growth. Approval of new drugs and label expansion of existing drugs should enable Novartis to offset the adverse impacts of the generic competition of key drugs.
Novartis is also looking to solidify its presence in the promising gene therapy space. The recent spate of acquisitions and collaborations has strengthened its pipeline. However, generic erosion of some drugs and recent pipeline setbacks are a concern. One of its top drugs, Entresto, is likely to lose patent protection.
Novartis has a Zacks Rank #3 (Hold) at present. The Zacks Consensus Estimate for this Swiss drugmaker’s 2025 EPS has increased from $8.92 to $9.03 over the past 90 days, while that for 2026 has risen from $9.27 to $9.41 during the same timeframe. The stock has risen 35.2% so far this year.