Drugmakers' solution to Trump tariffs

Promise some drug price cuts.

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Hello, everyone, it's Damian in New York. A White House crackdown on drug prices was, counterintuitively, warmly received by pharmaceutical investors. I'll explain why, but first ...

Today's must-reads

EU antitrust regulators raided Sanofi offices over "disparagement."  Permira is weighing a sale of Neuraxpharm that could bring more than  €3 billion.  Opinion: Chinese drugmakers have reasons to fear Washington.

Crisis averted

President Donald Trump was pleased. Standing before a gaggle of reporters in the Oval Office on Tuesday, he explained that after years of twisting arms and cajoling pharmaceutical executives, he was finally lowering drug costs and "ending the era of global price gouging at the expense of American families." Pfizer, one of the world's largest drugmakers, had agreed to voluntarily slash some of its prices by more than 80%, Trump said, and the company's major pharma peers would soon to follow suit.   And then drugmaker stock prices shot up. Pfizer, Merck, Eli Lilly and Johnson & Johnson added billions of dollars in market value despite the president promising they would soon forgo billions of dollars in revenue.  What gives? Wall Street had long feared the White House would impose aggressive policies that would hamstring the drug industry's profitability. Instead, Pfizer signed a voluntary deal that sounds unlikely to have much of an effect on its bottom line, analysts said. The company will reduce what it charges Medicaid, the government insurance program for low-income people. But that program already gets steep discounts from drugmakers. Pfizer also promised to price future drugs on par with what they cost in other wealthy nations. And the agreement came with a key concession: Pfizer secured a three-year reprieve from future tariffs on drug imports. That addresses the "two major overhangs" on the whole pharmaceutical sector, Pfizer Chief Executive Officer Albert Bourla said at the White House meeting, referring to anxiety over drug pricing policy and potential tariffs that was keeping investors on the sidelines. The deal also established a template for Bourla's C-suite peers, BMO Capital Markets analyst Evan Seigerman said in a note to investors, "allowing for headline pricing concessions and a Trump 'win' without more punitive implementation" of tariffs. Where Trump sees a major policy victory, analysts see a massive relief. "For all the hype and commentary around delivering a transformative win for lower drug prices," Pfizer didn't change a single numeral in its financial forecast in light of the deal, Cantor Fitzgerald analyst Carter Gould pointed out, suggesting the whole affair was "more optics than bite." – Damian Garde

What we're reading

Human skin cells have been fertilized to make an embryo for the first time, the BBC reports.  Millions of US seniors could lose at-home care in a government shutdown, the Washington Post reports.  There's a reason health-care providers aren't offering more nutritional advice, New York Magazine reports: The research isn't that good.

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Taiwan’s Trump problem

Welcome to Balance of Power, bringing you the latest in global politics. If you haven't yet, sign up here.For decades, the US has been Taiwa

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Welcome to Balance of Power, bringing you the latest in global politics. If you haven't yet, sign up here. For decades, the US has been Taiwan's most important backer in its efforts to keep Beijing at a distance. That support now seems increasingly uncertain under President Donald Trump. In July, President Lai Ching-te reportedly postponed an overseas trip after the US refused to grant him a transit stop in New York. Then in September, Trump blocked a military-aid package worth more than $400 million for Taiwan. Xiamen on mainland China seen across the Taiwan Strait from anti-landing barriers on a beach in Kinmen, Taiwan. Photographer: An Rong Xu/Bloomberg Around the same time, Beijing renewed pressure on Washington to change its wording on the self-governed archipelago, from the present stance that the US "does not support" Taiwan's independence, to opposing it outright. We don't yet know the outcome of that diplomatic gambit. But Chinese President Xi Jinping reinforced the message for any doubters yesterday, calling for "separatist efforts" to be resolutely rejected. Commerce Secretary Howard Lutnick added to Taipei's worries this week by calling on Taiwan to shift more of its world-beating chip fabrication to the US, so that half of America's demand could be met domestically. To many in Taiwan, such pressure further undermines its so-called silicon shield, since moving semiconductor production abroad would potentially give the US less incentive to come to Taipei's aid in the event of a Chinese invasion of islands it claims as its own. A wafer displayed at the Semicon Taiwan exhibition in Taipei on Sept. 10. Photographer: An Rong Xu/Bloomberg Taiwan's government formally pushed back today, saying it wouldn't agree, underlining tensions in ongoing trade talks. The wider concern in Taipei is that Trump might sacrifice Taiwan's interests in pursuit of engagement with Beijing as he seeks a trade deal with China and prepares to meet with Xi this month. For now, it remains to be seen whether developments will continue to tilt in Beijing's favor, or if US policy on Taiwan really is shifting despite Washington's denials. Regardless, it looks very much like Taipei will have to find new ways to maintain its precarious balance between the two superpowers. — Yian Lee

Global Must Reads

Congress blew past a midnight funding deadline, triggering the US government's first shutdown in almost seven years and the third under Trump, who's threatening to oust federal workers and eliminate programs favored by Democrats in response. Agencies began shuttering the government aside from essential duties, and with the two parties locked in a stalemate over health-care subsidies and using the moment to frame the 2026 midterm elections, the close-down and its economic effects could be prolonged. A US accord that grants duty-free access for more than 1,800 products from 32 African nations expired last night, halting a decades-old program aimed at promoting development and democracy on the continent. Trump's administration supports extending the non-reciprocal African Growth and Opportunity Act, though it needs legislation in Congress and that didn't happen before the midnight deadline as lawmakers focused on the government-funding standoff. Unrest raged for a fourth night in Morocco, with youths taking to the streets in more than a dozen cities of the North African kingdom to decry their government's lavish spending on the 2030 football World Cup as public services falter. Hundreds of Moroccans have been detained since the protests called by a loose, leaderless and tech-savvy group named GenZ212 began on Saturday, broadly echoing the youth-led demonstrations that have rocked Kenya, Nepal and Madagascar this year. A demonstration in Rabat, Morocco, on Monday. Photographer: Abdel Majid Bziouat/AFP/Getty Images A barnstorming speech attacking populist Nigel Farage at Labour's annual conference left UK Prime Minister Keir Starmer's internal rivals humbled and the party unified behind him, for now. Chancellor of the Exchequer Rachel Reeves separately plans to scrap a cap limiting family-welfare payments to two children per family in an attempt to dispel party criticism that the government needs more progressive policies to demonstrate its purpose, while an indicator of business sentiment logged a record low as summit wound down. A military court sentenced former Democratic Republic of Congo President Joseph Kabila to death in absentia for treason over his alleged support of an armed group in the east of the country and fined him more than $30 billion. Meanwhile, Rwanda-backed M23 rebels are expanding their territory in eastern Congo despite multiple peace agreements meant to end the fighting. Joseph Kabila. Photographer: Carl de Souza/AFP/Getty Images Former South African Police Minister Nathi Mthethwa was found dead at a hotel in Paris, where he served as Pretoria's ambassador. The prosecutor's office said he booked a room on the 22nd floor and a security window had been forced open. The UN Security Council approved a US plan to send a 5,500-person multinational "gang suppression force" to Haiti to replace a Kenya-led mission that has failed to bring peace to the troubled Caribbean nation. The Trump administration's crackdown on foreign students and academics violated the First Amendment by targeting them for expressing their political views, a federal judge ruled in an unusual opinion that broadly and sharply criticized Trump. Pakistan and the US are deepening cooperation in energy, mining and technology sectors, with Islamabad planning an investor conference in Washington this month to draw American investment, Finance Minister Muhammad Aurangzeb said in an interview. JOIN THE DISCUSSION: Hours after the US government shut down, what are we watching from Wall Street to Washington? Bloomberg journalists will answer your questions in a Live Q&A today at 10 a.m. EDT. Stream here. Photographer: Samuel Corum/Bloomberg

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Chart of the Day

Denmark is on heightened alert as European Union leaders gather in Copenhagen today, with a suspected drone intrusion temporarily shutting airspace and intensifying security concerns. A jump in the number of drone incursions has prompted a rush among NATO members to bolster their defenses, but the military alliance faces a multitude of challenges that will make it hard to mount a quick response. The head of the EU executive pledged last month that the bloc will build a "drone wall" and officials and industry leaders are now figuring out how to turn that into reality.

And Finally

Cuba's Fidel Castro was known for his marathon speeches, Hugo Chávez of Venezuela used a weekly talk show, while Trump deploys a "flood-the-zone" approach to saturate US media. Few world leaders, if any, attempt a daily hours-long meet-the-press session like Claudia Sheinbaum. Mexico's president inherited the choreographed spectacle from her predecessor, Andrés Manuel López Obrador, who pioneered the morning talkfest as a tool to connect directly with the masses and relentlessly press his agenda. One year into her term, Mexico's first woman president has made the mañanera her own. A smartphone streams Sheinbaum's morning press conference in Mexico City live yesterday. Photographer: Fred Ramos/Bloomberg

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