Pfizer reaches deal with Trump administration on drug pricing

NEW YORK - Pfizer Inc (NYSE:PFE), a pharmaceutical giant with $63.8 billion in annual revenue and currently trading at an attractive P/E ratio of 13, announced Tuesday it has reached an agreement with the Trump administration to lower prescription drug prices for American patients while maintaining investment in U.S. pharmaceutical innovation. According to InvestingPro analysis, Pfizer’s stock appears undervalued based on its Fair Value estimates.

The voluntary agreement addresses President Trump’s July 31 requests by ensuring Americans receive comparable drug prices to those in other developed countries and pricing new medicines at parity with other key markets. The deal also includes Pfizer’s participation in TrumpRx.gov, a direct purchasing platform where Americans can buy Pfizer medicines at discounts averaging 50% and reaching up to 85% for many primary care treatments and select specialty brands. With a substantial dividend yield of 7.21% and a track record of maintaining dividend payments for 55 consecutive years, Pfizer continues to deliver value to shareholders while adapting to market demands.

The agreement provides Pfizer with a three-year grace period from potential Section 232 tariffs, contingent on increased U.S. manufacturing investment. Specific financial terms remain confidential, according to the press release statement.

"By working closely with the Administration, we are lowering costs for patients and enabling greater investment in the U.S. biopharmaceutical ecosystem by ending the days when American families alone carried the global burden of paying for innovation," said Albert Bourla, Pfizer’s Chairman and CEO, who joined President Trump at the White House Tuesday.

Pfizer stated it plans to invest an additional $70 billion in U.S. research, development, and capital projects over the next few years, building on its $83 billion investment from 2018-2024. The company currently employs 31,000 people in the U.S. and operates 13 manufacturing and distribution sites and 7 major R&D facilities.

With the agreement in place, Pfizer indicated it will focus on developing treatments in oncology, obesity, vaccines, and inflammation and immunology. InvestingPro data shows the company maintains a strong financial health score of "GOOD," supporting its ambitious development plans. For deeper insights into Pfizer’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Pfizer Inc. has reached an agreement with the Trump administration to avoid tariffs on pharmaceuticals for three years in exchange for reducing prices on certain medications in the United States. As part of this deal, Pfizer will offer some products at an average 50% discount through a new direct-to-consumer website called TrumpRx. This platform will allow Americans to purchase drugs at government-negotiated discounted rates. President Donald Trump announced plans to cut drug prices by "100% or more," emphasizing the significance of this initiative. Additionally, Pfizer’s recent acquisition of Metsera has been noted, with Metsera reporting promising efficacy data from its MET-097i VESPER-1 trial. Despite these developments, Cantor Fitzgerald has maintained a Neutral rating on Pfizer, with a price target of $24.00. Meanwhile, Health and Human Services Secretary Robert F. Kennedy Jr. is considering adding certain autism symptoms to the list of compensable side effects under a government vaccine injury program. This potential change is being explored by a team led by attorney Andrew Downing, who specializes in vaccine injury cases.

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