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Big pharma stocks, as measured by the VanEck Pharmaceutical ETF (PPH) , plunged Monday morning then recovered in afternoon trading as investors reacted to mixed messages about President Donald Trump’s sweeping plan to cut prescription drug prices by as much as 80%.

PPH top holdings like Eli Lilly & Co. (LLY) and Johnson & Johnson Inc. (JNJ) fell as much as 4% in early trading.

International pharmaceutical stocks like Novartis AG (NVS) and AstraZeneca PLC (AZN) also declined amid fears that U.S. policy changes could ripple across the global industry.

However, major drugmakers staged a notable comeback in the afternoon as PPH closed 2% higher after the Trump administration released clarifying comments that eased some of the more severe concerns about how quickly and aggressively the pricing reforms would be implemented.

This intraday rebound helped limit losses but underscored the policy sensitivity of the sector.

Trump's Big Pharma Plan: A Move to Slash Drug Prices

President Trump's executive order introduces a " Most Favored Nation " (MFN) pricing policy, mandating that the U.S. pays no more for prescription drugs than the lowest price paid by other developed countries.

The administration argues that Americans have long subsidized global pharmaceutical research and development through higher domestic prices. The order sets a 30-day deadline for drug manufacturers to propose price reductions, with further actions promised if significant progress isn't made within six months.

Industry groups have criticized the move, warning it could stifle innovation and lead to reduced investment in new drug development.

Outlook 2025: PPH, Big Pharma Stocks, Broader Healthcare

Looking ahead, the performance of the healthcare sector in 2025 will largely depend on two major variables: the direction of U.S. trade policy and the extent to which President Trump’s aggressive prescription drug price reforms are implemented.

While the pharmaceutical industry faces immediate headwinds, long-term outcomes will vary based on how negotiations between the federal government and drug manufacturers unfold.

Big pharma stocks, heavily weighted in ETFs like PPH, are likely to remain under pressure in the short term. Valuation multiples may compress as investors price in the potential for lower U.S. revenues. However, if the policy rollout is watered down or delayed—as has often happened with healthcare legislation—and global demand for therapeutics remains strong, there may be room for a rebound later in the year.

More broadly, the healthcare sector remains a key defensive allocation during periods of economic uncertainty. With the potential for a prolonged trade war, rising unemployment and tightening consumer budgets, investors may continue to rotate into sectors like healthcare, which historically outperform during late-cycle or recessionary periods.

The sector’s combination of non-cyclical demand, innovation potential and relative earnings stability makes it a compelling core holding for portfolios preparing for volatility.

In summary, while headline risks around drug price reform may dominate in the near term, long-term investors could find opportunities in both pharmaceutical and biotechnology ETFs —provided they understand the policy risks, global trade implications and diversification potential that the healthcare sector provides.

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