The political spotlight has turned squarely on the pharmaceutical industry. On Aug. 13, President Trump sent letters to 17 of the world’s largest drugmakers, demanding implementation of most-favored-nation pricing within 60 days. The directive calls for Medicaid, Medicare and commercial payers to receive drug prices equal to the lowest level in any OECD country with GDP per capita of at least 60% of U.S. levels. The letters also push for revenue repatriation to lower U.S. prices and for direct-to-consumer distribution of high-volume drugs.
Critics argue the policy could discourage innovation, reduce patient access or push companies to retreat from international markets. Implementation details remain uncertain, but the pressure illustrates how quickly politics can reshape the operating environment for pharmaceutical giants. For investors, the challenge is separating headline risk from long-term value.
Finding Value In Pharma – Drug Stock Bargains
Pfizer (PFE) is no stranger to policy scrutiny. Even so, Q2 results underscored the company’s resilience. EPS grew 30% to $0.78, ahead of consensus, as revenue climbed 10% year-over-year to $14.7 billion. Demand was broad-based, from a 21% jump in the Vyndaqel/Vyndamax franchise to a 95% rebound in COVID vaccine sales and a 71% boost for Paxlovid. Sales of Abrysvo, the company’s RSV vaccine, surged 155% on uptake among adults and pregnant women, while cancer therapies such as Lorbrena saw a 48% rise in sales on stronger first-line use.
CEO Albert Bourla acknowledged the uncertainty surrounding drug pricing and tariffs, but he emphasized that discussions with the administration have been “productive” and that management remains confident in reaching a workable solution. That confidence is reflected in the updated 2025 EPS guidance of $2.90 to $3.10, which incorporates tariff costs, a one-time $1.35 billion R&D charge and ongoing cost cuts. Shares now trade at 8x forward earnings and yield 7%, suggesting the market is already discounting significant policy risk. I believe Pfizer’s revitalized pipeline, spanning vaccines, oncology and cardiovascular therapies, makes the current valuation compelling for long-term-oriented investors.
Amgen (AMGN) also delivered strong Q2 results. EPS of $6.02 easily beat expectations, while revenue grew 9% on 13% volume growth across therapeutic areas. Sales of Repatha, a cholesterol therapy, surged 31% to $696 million. Otezla sales climbed 14% to $618 million. Even as Prolia and Enbrel faced pricing pressure, new and growing therapies more than offset the declines.
Perhaps most exciting is MariTide, Amgen’s experimental obesity drug. Early Phase 3 data suggest weight loss of up to 20% at 52 weeks, with improved tolerability and promising cardiometabolic outcomes. Four Phase 3 trials are ongoing, with another in sleep apnea expected to begin later this year. Beyond obesity, Amgen’s pipeline is broad, spanning oncology, inflammation, cardiovascular disease and rare disorders.
Management reaffirmed full-year EPS guidance of $20.20 to $21.30, with revenue projected at up to $36 billion. At less than 14x forward earnings and with a 3.3% dividend yield, Amgen offers investors exposure to innovation, free cash flow strength and capital return.
In Conclusion
Drugmakers are facing mounting political pressure, but policy uncertainty often creates opportunity. Pfizer and Amgen trade at modest valuations relative to their earnings power, with dividends that pay investors to wait. For those able to look past short-term headlines, these pharmaceutical leaders offer both resilience and growth in an industry that remains essential no matter the political climate.
*****
For those who like what I have to say in this forum, further market analytics and stock picks can be found in my newsletter, The Prudent Speculator.