By Deena Beasley

SAN FRANCISCO (Reuters) – The biopharmaceutical industry is aiming for a 2025 turnaround after last year’s fall in investor returns but remains wary of what President-elect Donald Trump’s priorities are on hot-button issues. buttons such as drug price reforms and vaccines.

The pharma industry faces the biggest regulatory change in decades in the Biden Administration’s Inflation Reduction Act of 2022, which allows the federal government’s Medicare health plan for the first time to negotiate prices for most expensive prescription drugs.

“Nothing kills investment like uncertainty. The IRA has led to a lot of uncertainty in the sector,” Steve Ubl, head of industry lobbying group PhRMA, said at the JP Morgan Healthcare Conference this week in San Francisco.

PhRMA hopes the new administration will focus less on “ecosystem attacks” on the industry and instead seek to reduce inefficiencies that lower costs for patients, he said.

Prices for the first 10 Medicare-negotiated drugs were released in August, with the results largely in line with current prices after discounts and rebates.

The names of the next 15 drugs for price talks are due on February 1 and may be announced this week, although it is also possible that the final list may change after Trump takes office on January 20.

Last year, the Nasdaq Biotechnology Index fell 3%, compared with a gain of 23% for the bellwether and a jump of nearly 29% for the tech-heavy Nasdaq. The NYSE Arca Pharmaceuticals (TADAWUL:) The index rose by 1%.

The differences occurred despite all-time high stock prices hit by drug makers Novo Nordisk (NYSE: ) and Eli Lilly (NYSE: ). Lilly ended 2024 with a gain of 31%, while shares of Novo, which posted poor test results for a next-generation weight loss drug, fell 9% .

“Progress is uneven across the sector. There are haves and have-nots” as investors assess how drugmakers cope with looming patent expirations, said Roel Van den Akker, leader on PwC’s pharma deals.

EXPIRATION OF PATENT

Morgan Stanley (NYSE: ) estimates that nearly $175 billion in 2025 US large-cap biopharma revenue — 35% of the total — will go off patent by the end of the decade.

To replace that revenue drugmakers need new products, either from their own research or by acquiring companies with promising assets, but those transactions have slowed significantly in the past year.

The value of mergers and acquisitions in the life sciences totaled nearly $80 billion in the year to November, less than half of the total in 2023, according to the Iqvia Institute for Human Data Science. No deal over $5 billion was closed last year.

The expectation that the next chair of the Federal Trade Commission will be more deal-friendly than Lina Khan is considered positive for drugmakers.

On Monday, several deals were announced including a $14.6 billion acquisition by Johnson & Johnson (NYSE: ).

Trump nominated current Commissioner Andrew Ferguson to replace Khan. Investors were less enthusiastic about some of Trump’s other high-profile nominations to top positions in his next administration.

“RFK’s views on vaccines could affect some of the big pharmaceutical companies,” said Foley Hoag associate Beth Neitzel, referring to Trump’s pick to lead Health and Human Services, the Robert F. Kennedy Jr, who was a vaccine skeptic.

“I think the goal is also to find common ground. Making America healthy is all of us,” said CEO of Biogen (NASDAQ:) Chris Viehbacher in an interview during the conference.

PHARMA EXECS TO MAKE INFLUENCE

Pfizer (NYSE: ) CEO Albert Bourla highlighted the uncertainty in the industry in his conference call session with investors, but said Monday that he will try to influence the environment.

“There are many people who think, for our industry, the risks are greater than the opportunities. There are other people, among them myself, who think that the opportunities are greater than of risks. I think we will see,” he said.

J&J CEO Joaquin Duato told investors that “it’s hard for me to predict what will happen,” adding that he will push the Trump administration’s policies on innovation and access.

Investors are focused on the impact of government policy on drug prices, including any IRA changes that could affect how quickly individual drugs qualify for Medicare price negotiations.

The changes will be difficult to implement because they are written into the law, said Priya Chandran, biopharmaceutical sector leader at Boston Consulting Group.

“It’s unlikely that anything will change in the first year,” he said.

Foley Hoag’s Neitzel said reports of Trump’s “warm and cordial” dinner in December with Florida pharmaceutical executives brought some optimism.

However, “the relatively universal statements of Trump and RFK in the past about drug pricing do not suggest that this incoming Trump administration will help the industry,” he said.