The German business newspaper "Handelsblatt" reports on U.S. President Donald Trump’s proposed drug price cuts and the potential ripple effects across the pharmaceutical industry. If the administration follows through with plans to slash medication prices by 60 to 90 percent, major pharmaceutical companies could see their operating profits hit just as hard – or worse. That’s according to the latest market simulations from Porsche Consulting.
On average, the 20 largest European pharmaceutical companies generate about 35 percent of their revenue in the U.S. However, due to significantly higher drug prices there, profits from the American market are disproportionately large. A 50 percent drop in prices alone could cause profits to plunge by over 60 percent. To absorb such losses, companies would need to implement major cost-cutting measures across R&D, manufacturing, and sales.
Earlier this year, several leading pharmaceutical firms announced plans to expand their operations in the U.S., with total investments exceeding $270 billion. While it's unlikely that price cuts will be as steep as initially proposed, the industry’s outlook is becoming increasingly uncertain. “We no longer expect to see positive pricing trends for pharmaceuticals in the U.S.,” says Roman Hipp, Industry Lead Life Sciences at Porsche Consulting.
Read the full article (in German) in Handelsblatt.