AZN Strikes Drug Pricing Deal With Trump, Gets 3-Year Tariff Reprieve

AstraZeneca AZN recently signed a landmark agreement with the Trump administration to lower drug prices in the United States. The announcement comes just days after Pfizer PFE signed a similar deal with the government.

Like Pfizer, AstraZeneca has agreed to reduce the prices of its prescription drugs to match those in comparable developed countries, supporting President Trump’s Most Favored Nation (MFN) pricing proposal. The company’s products will be available at significant discounts — up to 80% — through direct-to-consumer channels and on TrumpRx.gov, a federal purchasing platform that is expected to go live next year.

In return, AstraZeneca will receive a three-year exemption from import tariffs on pharmaceutical ingredients, contingent upon expanding its domestic manufacturing operations. In this regard, AZN has already committed to investing $50 billion over the next five years to strengthen its U.S. research and production footprint. Pfizer also received a similar reprieve from the government.

As part of its investment plan, AstraZeneca recently ‘broke ground’ on a new manufacturing facility in Virginia — its largest single investment in a facility to date. This new facility will focus on producing drug substances for the company’s weight management and metabolic therapies, as well as its leading antibody drug conjugate (ADC) cancer drugs. AZN has earmarked $4.5 billion for constructing this plant.

AZN Stock Performance

Year to date, AstraZeneca’s shares have surged 29% compared with the industry’s 7% rise.

Big Pharma Steps Up U.S. Investments Amid Policy Shift

The Trump administration’s deals with AstraZeneca and Pfizer address the two biggest concerns that currently surround the broader pharmaceutical sector — drug pricing and tariffs. We view these deals as a turning point that could ease regulatory and pricing pressures that have weighed on the industry since the onset of this year, and expect more such deals to come soon.

Like AstraZeneca and Pfizer, several other large-cap pharma companies, such as AbbVie ABBV, Eli Lilly LLY and J&J, have also committed billions to U.S. manufacturing and R&D investments.

Earlier this year, AbbVie announced plans to invest more than $10 billion over the next decade. As part of this plan, ABBV recently announced a $70 million investment to increase the bioresearch and manufacturing capabilities at its Worcester, MA, facility. This new facility will boost domestic biologics manufacturing capacity to meet increased global demand and support U.S. production of current and next-generation oncology and immunology medicines.

In February, Lilly announced plans to invest $27 billion to develop four new manufacturing sites in the United States this year. This brings its total domestic manufacturing expansion commitments since 2020 to over $50 billion. The increased manufacturing investment is expected to enhance production capacity for LLY’s marketed drugs, specifically its popular GLP-1 products, Mounjaro and Zepbound.

J&J has announced plans to invest over $55 billion over the next four years to boost manufacturing, R&D and technology in the country.

AstraZeneca PLC Price

 

AstraZeneca PLC price | AstraZeneca PLC Quote

AZN’s Zacks Rank

AstraZeneca currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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