The White House announced that President Joe Biden plans to invoke the Defense Production Act of 1950, a cold-war era law, to boost the production of essential drugs and ease supply chain issues. Large U.S. drugmakers like Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE), Merck (NYSE:MRK), AbbVie (NYSE:ABBV) and Eli Lilly (NYSE:LLY) are expected to benefit from this push.
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The plan is reportedly one of the actions mentioned during the President’s meeting with his new supply chain resilience council. In a statement, the White House said Biden would use the Defense Production Act to increase domestic manufacturing of medications considered critical to national security. As part of the effort, the President will also issue a presidential determination to broaden the scope of the Department of Health and Human Services (HHS).
For its part, the HHS has set aside $35 million to aid in the domestic manufacturing of essential raw ingredients for injectable sterile medications. Furthermore, it also plans to select a coordinator for supply chain resilience and shortages to reinforce the supply networks of essential food and medical items.
In addition, the U.S. Defense Department will look for ways to lessen reliance on “high-risk foreign suppliers.”
Healthcare stocks saw a sector-wide marginal decline on Monday, with Pfizer and Eli Lilly shedding over 1.3% of their prices at the time of writing.
What are the Best Healthcare Stocks to Invest In?
Turning to Wall Street, TDOC stock remains the leader in upside potential here. This Moderate Buy-rated stock offers 36.2% against its average price target of $23.44. Meanwhile, with an average price target of $591.07, UNH stock is the laggard, as this Strong Buy-rated stock offers investors 8.67% upside potential.
