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Eli Lilly (LLY) shares have increased by 16% over the past week, primarily due to positive investor sentiment following Pfizer’s (PFE) recent agreement with the Trump administration. This deal addresses key concerns in the pharmaceutical sector regarding drug pricing and tariffs, signaling a potential easing of regulatory pressures for the industry.
Pfizer’s agreement allows it to align drug prices with those in other developed countries and will also offer substantial discounts through the upcoming federal platform TrumpRx.gov. In exchange, Pfizer will receive a three-year exemption from import tariffs on pharmaceutical ingredients, contingent upon investing $70 billion in U.S. operations. Other pharmaceutical companies, including AbbVie (ABBV) and AstraZeneca (AZN), also saw stock increases, with AbbVie planning to invest over $10 billion and AstraZeneca aiming for $50 billion by 2030.
Eli Lilly has committed over $50 billion to domestic manufacturing since 2020, with plans for four new U.S. sites this year. Its current price/earnings (P/E) ratio stands at 28.85, above the industry average of 15.96.
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