Trump’s AstraZeneca Deal Echoes Pfizer Pact. Big Pharma’s Political Headaches Are Easing.

AstraZeneca CEO Pascal Soriot (left) shakes hands with President Donald Trump in the Oval Office on Oct. 10. (Andrew Harnik/Getty Images)

The press conference that President Donald Trump hosted in the Oval Office with the CEO of drugmaker AstraZeneca on Friday played like a rerun of the late September Oval Office press conference with Pfizer’s CEO.

It was all there: A similar cast of characters reciting similar lines, praising Trump, and making assertions about the importance of the deal.

For investors, that familiarity should have been soothing, like a replay of a favorite TV show. The deal the White House announced with Pascal Soriot, CEO of U.K.-based AstraZeneca, hews closely to the template set by the Pfizer deal and appeared to confirm that the political headaches that drugmakers have suffered throughout the year are fading.

Biotech and pharma stocks soared following the rollout of the Pfizer agreement two weeks ago. The S&P 500 Pharmaceuticals Industry Index has since risen 8.3%, while the broader S&P 500 has been flat. The SPDR S&P Biotech exchange-traded fund, which tracks the biotechnology sector, is up 6.1% over the same period.

On Monday morning, with AstraZeneca’s deal also signed, the political picture was looking better for the drug industry than it has since at least May, when President Trump resurfaced his first-term drug pricing proposals and continued to threaten steep tariffs for drug imports.

Now, the Trump administration has promised to delay the implementation of any sector-specific tariffs for both AstraZeneca and Pfizer for at least three years, and there’s every indication that more drugmakers could join the club.

In return, the Trump administration appears to be asking relatively little of the companies. “It seems increasingly likely that deals with other companies will utilize a similar framework,” J.P. Morgan analyst Chris Scott wrote on Monday. “Both of these recent deals point to a framework that should have a limited / highly manageable impact to the group.”

AstraZeneca, like Pfizer, has promised significant investments in U.S. manufacturing and R&D. The company also says it will sell certain products straight to consumers at steep discounts to their list prices, an arrangement that may be useful to only a small sliver of patients, given that out-of-pocket prescription costs for people with insurance are generally a tiny fraction of a drug’s list price.

During Friday’s news conference, Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz said that the federally run direct-to-consumer drug website that the administration has been touting in recent weeks, TrumpRx.com, won’t actually sell medicines, but will rather “make information available to everyone so you go to the right place to buy the right medications.”

The White House also said that state Medicaid programs will pay less for AstraZeneca’s drugs, and that AstraZeneca will set U.S. prices for its new medicines on par with those charged in other wealthy countries.

Questions remain, and the details are somewhat difficult to unpack, in part due to the numbers the White House is using.

President Trump said on Friday that “we’re gonna get, in some cases, a thousand percent reduction” in drug prices, a mathematical impossibility, since percentage declines cannot be greater than 100%.

Biotech stocks, spurred by the Pfizer deal and by a wave of recent acquisitions, have been climbing steeply in recent weeks. Drug stocks had been up, too, though they were down on Monday. As Barron’s wrote early this month, big troubles still weigh on the big drugmakers. Enormous patent cliffs loom for lots of the big names, notably Pfizer, Merck, and Bristol Myers Squibb.

That could keep the drug stocks from climbing higher, even as the political worries lift, at least for the companies with the most significant patent challenges. For the others, analysts say the outlook is getting brighter.

“Overall, we see these deals as removing significant uncertainty on [most-favored nation] pricing and tariffs that have represented an overhang on the group this year and believe there is further room for sector multiples to expand,” J.P. Morgan’s Schott wrote in his Monday note.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com