Closing the biodiversity financing gap, Europe on the rocks, making US drugs cheap again and Q1 earnings

With Americans paying 2-4x more for prescription medicines than other advanced economies, President Trump has urged pharmaceutical companies to voluntarily cut drug prices by 30-80% within 30 days. If successful, this could impact global markets as US and European firms derive 58% and 45% of their revenue from the US. The top 20 pharma companies earned USD827bn last year, but a 50% price cut for Medicare and Medicaid patients would have reduced this to USD606bn, unsustainable for an industry that invests 15%-20% of revenue in R&D. Meanwhile, five major firms have pledged USD180bn in US investments, enhancing the sector’s already strong negotiating power. Reliance on imports from China and India could still put the sector in the tariff spotlight, though this could disrupt local production and contradict efforts to reduce drug costs

Despite macro and geopolitical challenges, US S&P 500 companies posted strong earnings, while Europe saw modest growth with cautious earnings revisions due to tariffs and currency headwinds. However, amid ongoing tariff turmoil, US companies now anticipate 2025 growth at +8.5%, down from 10.5% pre-“Liberation Day”, while EU companies expect +1.9%, down from +5.8%.  Financials, technology and infrastructure are outperforming, while consumer discretionary and energy lag. Despite headwinds, our macro-based EPS growth models confirm analysts’ expectations of earnings resilience through 2025.