Why Buy Drug Stocks Now

Investors might mark Monday, May 12, 2025, as the reversal for the downtrend in drug stocks. When the White House targeted an up to 80% cut in drug prices, AbbVie (ABBV), Pfizer (PFE), GSK, and Regeneron (REGN) shares fell.The sell-off reversed intraday when the U.S. President clarified that drug makers would not see their profits fall. That implied that plan providers like Cigna (CI) or UnitedHealth (UNH) would face lower profitability.Investors may take advantage of the market’s confusion by buying drug manufacturers. In addition to the above-mentioned names, consider Bristol-Myers (BMY), Gilead (GILD), Merck (MRK), and Eli (LLY). Diagnostic providers like Thermo Fisher (TMO) and Danaher (DHR) are also attractive.Drug makers with the highest diversity include Vertex (VRTX), while Moderna (MRNA) is a speculative, short-term trade.The federal agencies will have trouble meeting the most favored nation policy. Efforts to cut drug prices will have many challenges. For example, the courts previously blocked the Medicare and Medicaid programs from setting lower prices.Drug manufacturers successfully challenged proposals to lower prices. They need high profitability to fund further research. Without replenishing their drug pipelines, those companies risk margin erosion after patent expiration.Bet on drug prices barely changing in the next year. That would justify the continued rebound in drug manufacturing stocks.