A "drug pricing" bomb exploded. No blast or is it delayed?

A new chapter opens with the signature into law of the biggest drug pricing reform in decades. Despite what could have been a major blow to investors' confidence and a drop in stock prices, the market is mostly unfazed, how is it possible?

Bottom line

The effects of the newly approved bill are delayed and can be mitigated. The pharma lobby has time and the legal means to retaliate, for instance, by pulling forward price increases at market launch rather than spreading them over the life cycle of drugs. Also, negotiations for blockbusters ~10 years old place rather the generic and biosimilar industry at risk. Finally, the key pharma players have enough cash and a broad palette of M&A targets to cherry-pick future blockbusters, helping prevent too much revenue erosion.  For investors, a good strategy to entirely avoid the hassle and better capture the cash in the pharma pockets is to focus on earlier-stage biotech with catalyst-rich pipelines.

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