近期关税和最惠国评论可能并不像市场预期的那么糟糕

USA | Biotechnology Tariff and MFN Comments Recently May Not beas Bad as Street Expectations Post large-cap EPS we see sector-specific tariffs as likely and heating up - butpredict they would not be as bad as expected given comments by Trump hemay allow 100% tax-deductible expensing for 4 years for co's to build US manuf+ institute a "tariff wall" after allowing time. New WH comments suggest MFNpricing "might" just be for Medicaid instead of broad Medicaid cuts but thisremains a fluid situation and not necessarily as bad as expected. What's new? (1)The president today signed an executive order reducing the time it takes to approve newdomestic pharma plants. (2)During the signing of the EO, he also comments that he will make an announcement on pharma-specific tariffs and drug pricing “in the next two weeks.” Exhibit 1 - President Trump comments on drug pricing + pharma tariffs today Source: White House, Jefferies. (3)Trump'srecent comments imply pharma-specific tariff proposals are coming but the read-through is it may not be as bad as expected (consistent w/ our view to buy the sector given thepullback): •New 100% tax deduction expensing of US factories for 4 years. Previously, this was only fora 1-year period at 100% deduction w/ the deductible percentage decreasing in subsequentyears but Trump is now suggesting a 4-yr window for cos to onshore manufacturing.•Give biopharma companies time to return to the US before a "tariff wall"is constructed. (4) Media is reporting the White House is pressuring Congress to incorporate “MFN” pricing forMedicaid drugs– this could circumvent the impact of larger Medicaid cuts onpatientscoveredby Medicaid but could pot'l have a larger impact tocos w/ higher Medicaid exposure on the margin.Pharma cos have been lobbying against MFN pricing while some have even called on the EU to “paymore” for drugs (seems unlikely and dubious). Some reports note there could be conflict betweenthe WH + House with WH pushing for MFN pricing + the House pushing for Medicaid cuts. Unclearhow this plays out. We prev published GILD has 25% Medicaid exposure to US HIV while VRTX is~20% Medicaid in CF; we've spoken w/ both cos + note various scenarios including pt assistanceprograms on coverage cuts - but remains unclear if MFN applies to current or future drugs and thispt group is already the lowest margin biz (biggest discount at 23% to ASP...). Michael J. Yee * | Equity Analyst(415) 229-1535 | michael.yee@jefferies.com Dina Elmonshed * | Equity Associate+1 (212) 778-8388 | delmonshed@jefferies.com Jenna Li * | Equity Associate(332) 236-6891 | jli9@jefferies.com Kyle Yang, CFA * | Equity Associate(212) 284-2260 | kyle.yang@jefferies.com Matthew Hagood * | Equity Associate+1 (212) 778-8293 | mhagood@jefferies.com Madeleine Lee * | Equity Associate+1 (212) 778-8733 | mlee6@jefferies.com Recall – the House proposal calls for $880B in cuts from the committee overseeing Medicaid. JEF Windley ests $500B could come from Medicaid over 10 yrs. The Senate + House have passedresolutions and are now drafting a bill although reconciliation could take time given the gapbetween $4B in the Senate (set as a low baseline to speed up the process w/ more cuts to belayered on top) and $1.5T in cuts called by the House + some Republicans oppose huge Medicaidcuts (Bacon, Collins, Murkowski) which could chip away majority in the House (218-215) + Senate(53-47). On Q1 EPS mgmt teams were pressed hard on tariffs- overall guiding to limited impact fromLiberation Day tariffs + increased indirect costs (steel, chemicals, etc.) which are now included inguidance (AMGN, GILD reported Q1 beats but did not raise guidance which now includes impactfrom tariffs). Cos are not setting expectations for pharma-specific tariffs given not much knownabout how these will be implemented but stockpiling and investing in US manufacturing remainkey themes.*see inside for comments from large-cap/pharma* A Section 232 investigationinto “finished drug products, critical inputs such as API, and keystarting materials, and derivative products of those items” was initiated on Apr 14 and would allowthe president to enact sector-specific tariffs on basis of national security. The language impliesboth finished drug product + API could be tariffed; where tariffs will impact the sector remainsunclear. Company Valuation/Risks For Important Disclosure information on companies recommended in this report, please visit our website at https://javatar.bluematrix.com/sellside/Disclosures.action or call 212.284.2300. Analyst Certification: I, Michael J. Yee, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressedin this research report. I, Dina Elmonshed, certify that all of the views expresse