European healthcare stocks jumped on Wednesday, following a strong rally in the United States. The surge was driven by a major deal between Pfizer and President Donald Trump. Under the agreement, Pfizer will lower prescription drug prices in the Medicaid program in exchange for tariff relief.
The deal, considered less damaging than expected, offers clarity to global drugmakers after a turbulent year. Trump has repeatedly criticized the sector over high U.S. medicine prices, creating uncertainty for investors.
Analysts say the Pfizer deal could pave the way for other pharmaceutical companies. Many firms may now look to strike similar agreements, trading lower drug prices for tariff cuts. According to insiders and lobbyists, this could become a wider trend in the industry.
Lucy Coutts, investment director at JM Finn, said she expects European pharma companies to negotiate with the Trump administration. She noted that future agreements may involve investment in U.S. manufacturing and participation in TrumpRX, a website designed to give Americans access to discounted drugs.
A Boost for Pharmaceutical Shares
In July, Trump sent letters to 17 major drugmakers demanding lower prices in line with those abroad. He requested binding commitments by September 29. Pfizer became the first company to finalize a deal.
American patients often pay almost three times more for medicines than patients in other developed countries. Trump has been under pressure to change this dynamic.
Markets responded quickly. On Wednesday, Europe’s healthcare sector index soared 4.3%, marking its biggest daily gain in five years. Among the top movers, Ambu shares surged more than 10%, Sartorius rose 7%, and big names like Merck, Roche, and AstraZeneca gained around 8%. Novo Nordisk and Novartis also advanced strongly.
Pfizer’s U.S. shares had already risen 7% on Tuesday, sparking gains across other American pharma stocks. Analysts at Shore Capital and HSBC both said the agreement offered clarity and much-needed relief for the market.
Constructive Talks with Washington
Several other European drugmakers confirmed they are in talks with the Trump administration. GSK, Merck KGaA, Roche, Novo Nordisk, and Novartis all expressed their willingness to work with U.S. officials. Their goals include making drugs more affordable and boosting American manufacturing.
Analysts at Berenberg estimated that even a 50% cut in Medicaid sales would have a limited effect on earnings. The hit would range from 1% at Pfizer to 7% at GSK. Bernstein added that European pharma companies have already announced $200 billion in U.S. investments.
Angelo Meda, head of equities at Banor SIM, said the agreement came as a relief. He explained that 2025 was expected to be a year of growth for drugmakers, but tariffs had slowed momentum. Now, the Pfizer deal could inject fresh optimism into the sector.
