Core Viewpoint - Pharmaceutical shares experienced their strongest week in 23 years, driven by Pfizer's drug-pricing and tariff deal with the U.S. government, easing long-standing pressures on the industry [1][2]. Group 1: Market Performance - The S&P 500 Pharmaceuticals Index surged 10.8% last week, marking its best performance since July 2002, although it remains up only 6.6% for the year, underperforming the S&P 500's 14.4% increase [1]. - Pfizer's stock rose 15% over the past week following the deal with the U.S. government [2]. Group 2: Policy Changes - The deal with Pfizer signals relief for the pharmaceutical industry after months of uncertainty, following earlier discussions of potential tariffs and drug-pricing reforms by the Trump administration [4]. - The Trump administration exempted U.S.-based drugmakers from pharmaceutical levies, creating favorable conditions for the sector [5]. Group 3: Valuation Metrics - Large Cap Pharmaceuticals are trading at a forward P/E of 14.84X compared to the S&P 500's 20.17X, indicating a cheaper valuation [6]. - The PEG ratio for the pharmaceutical industry is 1.61X versus 2.34X for the broader market, with projected EPS growth for large-cap pharma at 15.28% compared to 7.04% for the S&P 500 [6]. Group 4: Return Profiles - The return-on-equity ratio for Large Cap Pharmaceuticals stands at 36.77%, significantly higher than the S&P 500's 17.03% [7]. - The industry's return-on-assets and return-on-investment ratios are also superior to those of the broader index, at 13.32% versus 6.80% and 22.96% versus 11.53%, respectively [7]. Group 5: Defensive Sector Appeal - Pharmaceuticals are viewed as a defensive sector, attracting investors during market volatility, especially given the recent positive developments from the Trump administration [8][9]. - The sector is expected to maintain demand due to its non-cyclical nature and the aging population [8]. Group 6: Investment Vehicles - Pharmaceutical ETFs such as VanEck Pharmaceutical ETF (PPH), iShares U.S. Pharmaceuticals ETF (IHE), Invesco Pharmaceuticals ETF (PJP), and SPDR S&P Pharmaceuticals ETF (XPH) are highlighted as potential investment options [10].