The healthcare debate

Pharmaceutical (PBL) stocks continue to face headwinds as mounting political pressure on drug pricing gains momentum. With drug prices already falling at 1% YoY, reports of key lawmakers coming to a bipartisan agreement aimed at increasing competition from cheaper generics should further weigh on drug prices. However, health care service providers (HES) will continue to benefit from relatively stronger pricing as they are less vulnerable to political pressure and foreign competition. We expect the current divergence between HES & PBL earnings to continue, which should support stock prices of the former.



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