The share price of Teva Pharmaceutical Industries (TASE: TEVA; NYSE: TEVA) is down by 7% in Tel Aviv this morning, in the wake of the announcement by US President Donald Trump of his intention of cutting prices of prescription drugs in the US “immediately” by 30-80%, by means of an executive order. “I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World,” Trump posted on the Truth Social network.
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The announcement has sent share prices of pharmaceuticals companies around the world tumbling. Japanese companies Chugai Pharmaceuticals and Takeda Pharmaceuticals are down 11% and 5.5% respectively; Korean company Celltrion is down 3.9%; and Indian company Sun Pharmaceutical Industries (which holds Israeli company Taro) is down 3%.
Uri Hershkovitz, manager of hedge fund Bennu Pharma, told “Globes” that because of the especially high exposure of Teva’s drug Austedo to government channels, if the drug is included in the Most Favored Nation policy, every percentage point fall in the price of the drug will mean a 1% cut in Teva’s cash flow. Austedo, an original drug that treat’s involuntary movement in Huntington’s disease patients, is currently Teva’s leading product, and is expected have sales of $2 billion this year.
In general, Hershkovitz says, “Since the power of presidential executive orders is limited, it is not clear at the moment how Trump intends to carry out the cut in prices, through what legislative track, which government programs will participate in the move, which countries will serve as reference points for Most Favored Nation, and what price reductions will result. The executive order in itself will not lead to a cut in prices. That will probably require legislation in the houses of Congress, where the pharmaceutical lobby is strong. All the same, we should remember that the Democrats, who have always been in favor of such legislation, could tip the balance.”
Hershkovitz estimates that until further details are known, the pharmaceuticals sector will be volatile.
Published by Globes, Israel business news – en.globes.co.il – on May 12, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
