To The Moon

[Allin]Hey~Tigers: The pharma sector is currently experiencing a "heaven and hell" divergence.

On one side, $Merck(MRK)$ and $Amgen(AMGN)$ enjoy safe-haven premiums, $Eli Lilly(LLY)$ hits new highs on GLP-1 deal certainty; on the other side, health insurance faces a business model collapse due to Trump's "direct subsidy payment" rhetoric. Investors must watch policy signals closely to avoid walking a tightrope between innovative drug dividends and policy risks.

This article focuses on:

• Market Overview: Dow Hits New High, Pharma Sector Emerges

• GLP-1 Weight Loss Drug Market Upheaval: Government Price-Cut Deal Impacts Lilly, Novo Nordisk Competitive Landscape

• Trump's Comments Trigger Health Insurance Sector "Earthquake"

• In a Polarized Market: Focus on Select Stocks and Smart Money Moves

I. Market Overview: Dow Hits New High, Pharma Sector Emerges

$Dow Jones(.DJI)$ Tuesday surged near historic highs, with pharmaceutical giants leading the charge. $Merck(MRK)$ topped Dow components with a 4.8% gain, while $Amgen(AMGN)$ soared 4.6%. The two giants ignited enthusiasm across the healthcare sector.

Leading Stocks Analysis: Fundamental and Technical Resonance

$Merck(MRK)$ 's explosive rally was no accident. Market rumors suggest Keytruda patent strategy achieved key breakthroughs, while early pipeline candidates disclosed positive oncology immunotherapy data. Technically, the stock broke above the 200-day MA at $87, closing above $90. Options markets show heavy call position building, implying institutional investors see upside to the $95 resistance zone.

$Amgen(AMGN)$ was even stronger, with the 4.6% gain pushing it to fresh 52-week highs near the historic peak of $346.8. Mainly benefiting from 37% biosimilar growth in Q3 and a strategic partnership with Lonza to reduce R&D risks. RSI shows ample momentum.

Pharma ETFs like $ProShares Ultra Nasdaq Biotechnology(BIB)$ , $GRI BIO INC(GRI)$ , and $Direxion Daily S&P Biotech Bull 3x Shares(LABU)$ , $Direxion Daily Pharmaceutical & Medical Bull 3X Shares(PILL)$ , $Direxion Daily Healthcare Bull 3X Shares(CURE)$ all rose, showing institutions are piling into this defensive growth sector.

However, extreme divergence emerged: GLP-1 weight loss drugmakers hit new highs on policy tailwinds, while managed care and hospital stocks faced historic selling on Trump healthcare reform rhetoric.

II. GLP-1 Weight Loss Drug Market Upheaval: Government Price-Cut Deal Impacts Lilly, Novo Nordisk Competitive Landscape

While traditional pharma celebrated, global weight loss drug duopolists $Eli Lilly(LLY)$ and $Novo-Nordisk A/S(NVO)$ saw shocking news. $Defiance Daily Target 2X Long NVO ETF(NVOX)$

Per the deal, they agreed to cut GLP-1 weight loss drug (Mounjaro, Wegovy) Medicare prices by 30-40%. Core terms:

Policy Compensation: Drugmakers Receive Massive Benefits, in exchange, both companies received:

• Three-year tariff exemption (worth >$5B)

• FDA priority review vouchers (cuts new drug review by 6-10 months)

• Novo Nordisk's additional $10B US investment

Market Impact:Near-term pressure

$Eli Lilly(LLY)$ Stock jumped 5% on Nov 10 to a record $978. Since late October, continuous gains have pushed it near $1,000. Goldman Sachs maintains a $95B 2030 market forecast, believing "price for volume" will open the 60M Medicare patient market. Lilly's oral orforglipron launches Q2 2026 with first-mover advantage.

$Novo-Nordisk A/S(NVO)$ : Relatively weak, Q3 growth at just 5%, Danish capacity cost pressures. But its semaglutide diabetes moat remains solid. Novo fell 0.8% Tuesday on margin and supply cost concerns.

Long-term certainty strengthened

Competitive barriers reinforced: Deal terms require three-year supply stability guarantees, effectively blocking smaller weight loss drug developers from Medicare and strengthening the duopoly.

III. Trump's Comments Trigger Health Insurance Sector "Earthquake"

In stark contrast to pharma gains, managed care and hospital stocks collapsed.

Timeline: Nov 8-11

President Trump continuously attacked ACA subsidy mechanisms on social media and campaign events, calling it "a taxpayer money disaster" and suggesting he'd "completely reform" Medicaid and Medicare Advantage payments if re-elected.

Trump Quote:

"Let's start now—take the hundreds of billions flowing to these 'big bad' blood-sucking insurers and give it directly to the people... End the worst healthcare system in the world, ObamaCare."

This ignited a health insurer selloff:

IV. In a Polarized Market: Focus on Select Stocks and Smart Money Moves

• Traditional Pharma & Biotech: Safe-haven capital inflow and clear earnings visibility make Merck and Amgen top picks. Low valuations (forward P/E ~13x) and 3%+ dividend yields are attractive for long-term investors.

• Emerging Therapies: GLP-1 enters "policy implementation phase." Focus shifts from R&D to commercial execution. Lilly's superior capacity planning and product mix (diabetes + weight loss + Alzheimer's) command valuation premiums, while Novo Nordisk must prove cost control and US localization.

• Avoid List: Any company with >40% revenue from ACA, Medicaid, or Medicare Advantage needs caution. OSCR, CNC face valuation trap risks; policy uncertainty will overhang until 2024 election clarifies.

Smart Money Flows in ETFs

Despite volatile individual stocks, $Health Care Select Sector SPDR Fund(XLV)$ and $iShares Biotechnology ETF(IBB)$ saw inflows.

Data shows institutions aren't leaving healthcare but "risk-repricing"—adding patent-protected pharma, cutting policy-sensitive insurers/hospitals, and tactically trading GLP-1 names.

Outlook: Divergence Continues, Watch Three Catalysts

Risk Warnings:

• Execution Risk: TrumpRx platform launch in Jan 2026; tech glitches or supply disruptions could hurt stocks

• Legal Risk: GLP-1 Medicare coverage requires congressional reform; deal could collapse if not passed by 2026

• Political Risk: If Democrats win 2026 midterms, ACA subsidy mechanisms could be reviewed

ALL in all:

The current pharma rally is essentially a violent repricing of "safe assets" vs. "policy-risk assets."

$Merck(MRK)$ and $Amgen(AMGN)$ 's surge reflects the market chasing certainty premiums, while $Eli Lilly(LLY)$ and $Novo-Nordisk A/S(NVO)$ 's government deals signal innovative drugs shifting from "free pricing" to "value-based pricing."

Meanwhile, Trump's comments create huge uncertainty for 2024 US healthcare policy, forcing a systemic repricing of managed care valuations.

Investors must watch policy signals closely to avoid walking a tightrope between innovative drug dividends and policy risks.

And Tigers, what concept stocks do you own or hold? Or is an index or sector ETF the better choice? What's your strategy?

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