Why SocGen likes European pharma
XLV•European pharmaceuticals are outperforming the market after a sluggish start to the year. Societe Generale strategists cite US sales exposure, diversification and valuations as reasons to overweight the sector.
1. Three reasons to overweight
Societe Generale strategists say European pharmaceuticals were one of the bank’s key trade ideas for 2026 and are now outperforming the market after a sluggish start. They cite the sector’s exposure to the US, where it generates more than 40% of sales, and say euro weakness could be a tailwind; a Democratic sweep in the midterms could also ease healthcare policy concerns.
2. Diversification and valuation
The strategists say pharma could hedge against AI risks and other macro risks, including higher oil prices and OAT-Bund spreads. They also say European pharma trades at a record discount to US pharma’s 20.8 times, despite similar earnings growth since 2015 and significantly lower volatility.
