Swiss Pharmaceutical Stocks: A Buying Opportunity Despite Adversity

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  Serge Nussbaumer
  Chefredaktor

The outlook for the global pharmaceutical sector has deteriorated. With the ZKB bonus certificate on Swiss pharma stocks, investors can participate in the price potential of the equity basket without being fully exposed to market volatility.

With Donald Trump’s return to the White House, the global pharmaceutical industry has once again come into focus on the political agenda. This became evident in mid-May, when the U.S. President announced his intention to drastically lower drug prices in an effort to curb the high costs of the U.S. healthcare system. Whether Trump will follow through on these plans, what they will entail in detail, and whether such measures can be implemented at all remains uncertain. What is clear, however, is that the business environment for the industry is likely to remain volatile, making it difficult to assess the outlook for pharmaceutical stocks.

Investor uncertainty is reflected, among other things, in the performance of U.S. healthcare stocks, which have lagged the broader market since Trump’s election victory last November. Over the past seven months, pharmaceutical stocks included in the S&P 500 have lost more than 8%, while the overall index gained 5.4% during the same period (including dividends, as of June 4, 2025). Year-to-date, the healthcare sector is also underperforming, down 2.7% compared to a 2.1% gain in the S&P 500. A similar pattern can be observed on the Swiss stock exchange, although the underperformance of the pharma sector is less pronounced than in the U.S.

Safety Net in Volatile Market Phases

Political uncertainties also open up investment opportunities. For investors who believe in the potential for price gains in the Swiss pharmaceutical sector but wish to protect themselves against market turbulence, the ZKB bonus certificate on Alcon, Galderma, Lonza, Sandoz, and Straumann may be an attractive option. These five pharmaceutical companies represent a broad spectrum of the value chain – from ophthalmology and aesthetic dermatology to generics, active ingredient production, and medical technology.

The bonus certificate has a term of two years and features a 65% barrier that is observed at maturity only (European barrier). The product also offers a bonus level of 115% and 1:1 participation. In concrete terms, this means: if all five stocks are above the barrier at maturity, the repayment is at 115% or higher, depending on the value of the basket relative to the bonus level. Since the barrier is European, it is irrelevant whether one or more stocks fell below the barrier during the term. Only the level at maturity matters. If the barrier is breached at expiry – that is, if one or more stocks have lost 35% or more compared to the initial fixing – the weakest performer is delivered, resulting in a loss.

Weighing Opportunities and Risks

Compared to a direct investment in equities, the bonus certificate offers the advantage that investors can generate attractive returns even in stagnant or slightly declining markets. This is due to the bonus component, which guarantees a minimum repayment of 115%, provided the barrier is not breached at maturity. If the basket value exceeds the bonus level, investors benefit from unlimited participation in the price gains. The barrier acts as a safety buffer, which can be advantageous in uncertain market phases. However, unlike direct equity investments, investors forgo any potential dividend payments.

As with any investment, investors must also consider the risks associated with this product. These include issuer risk, the risk of a barrier breach, and general market risk. Ultimately, the investment decision should be based on the investor’s individual investment needs and market expectations.

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