Thursday, 5 June 2025 Reading time : 4 minutes

Following Donald Trump's return to the White House, the global pharmaceutical industry has moved to the forefront of the political agenda. This became clear in mid-May, when the US President announced plans to drastically reduce drug prices in an attempt to curb the high costs of the US healthcare system. It remains to be seen whether Trump will actually implement his plans, what they will entail, and whether the relevant measures can be implemented at all. What is clear, however, is that the business environment for the industry is likely to remain uncertain, making the outlook for pharmaceutical stocks difficult to assess.

Investor uncertainty is reflected in the underperformance of US healthcare stocks since Trump's election victory last November, which have been lagging behind the overall market. Pharmaceutical stocks included in the US S&P 500 index have lost nearly 9% over the past seven months, while the overall index has gained 5% (including dividends, as of June 4, 2025) over the same period. Since the beginning of the year, the healthcare sector has also underperformed the S&P 500, with a loss of 2.9% compared to an increase of 2.1% for the overall index. A similar pattern can be observed on the Swiss stock exchange, although the underperformance of the pharmaceutical sector is less pronounced.

A safety net in uncertain times
However, the political uncertainties also create investment opportunities. Investors who believe that the Swiss pharmaceutical sector will see price gains, but who also want to hedge against market turbulence, may be interested in the ZKB bonus certificate on Alcon, Galderma, Lonza, Sandoz and Straumann. These five companies cover a broad spectrum of the value chain, including ophthalmology, aesthetic dermatology, generics, active ingredient production, and medical technology.

The bonus certificate has a term of two years and is equipped with a barrier of 65%, which is monitored at expiry (European barrier). The product also features a bonus level of 115% and 1:1 participation. Specifically, this means that if the five shares are trading above the barrier at maturity, the redemption price will be 115% or higher if the value of the basket of shares is above the bonus level. As this is a European barrier, whether one or more shares breach the barrier during the term is irrelevant for the repayment. Only the observation at the end of the term is relevant. If the barrier is breached at maturity – i.e. if the value of one or more of the equities has fallen by 35% or more compared to the initial fixing – the weakest share in the selection will be delivered and a loss will be incurred.
 
Weighing opportunities and risks
Compared to a direct investment in equities, the bonus certificate offers investors the advantage of generating appealing returns, even in stagnating or slightly falling markets. This is owed to the bonus component, which ensures a minimum repayment of 115% as long as the barrier is not breached at maturity. If the basket value exceeds the bonus level, investors participate fully in the price gains. The barrier acts as a safety buffer, which can be advantageous in uncertain market phases. However, investors forego any dividend payments compared to a direct investment.

As with any investment, however, investors must consider the associated risks. These include issuer risk, the risk of breaching the barrier and general market risk. Therefore, the investment decision always depends on investors' individual investment needs and their market expectations.

In subscription until June 26, 2025.

Product details
Term: 2 years
Currency: CHF
Valor: 144 651 101

Termsheet

Indicative terms

 

Disclaimer
This communication is for marketing purposes. It is neither an offer nor an invitation to submit an offer, to purchase or to subscribe to securities and does not constitute investment advice. You should consult your advisors before making an investment decision. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, financial condition, development or performance of the issuer to be materially different from any future results, financial condition, development or performance expressed or implied by such statements. The present document has not been drawn up by the research department as defined in the rules of the “Directives on the Independence of Financial Research” published by the Swiss Bankers Association, hence these rules do not apply to this document. If securities are mentioned in the communication, the base prospectus, the final terms and any key information document may be obtained free of charge from Zürcher Kantonalbank, Bahnhofstrasse 9, 8001 Zurich, VRIS, and from www.zkb.ch/finanzinformationen.
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