On February 20, Emily Field, the Head of European Pharma Research at Barclays, shared her insights with CNBC regarding the recent performance of obesity medications, the implications of U.S. tariffs, and the evolving dynamics within the pharmaceutical industry. Field expressed optimism for the first half of this year, suggesting that despite ongoing discussions about the effectiveness of obesity medications, the industry appears to be on a relatively stable path. She noted, however, that leading companies in this sector have exhibited inconsistent results over time, fueling ongoing debates about the efficacy of these treatments.

Field described the current moment as a pivotal one for the pharmaceutical industry, stating that the traditional reliance on U.S. biotechs is shifting. "We dont really need to buy U.S. biotechs necessarily. We will if it makes sense, but we can buy perfectly good biotech assets through licensing deals with Chinese companies," she said. This shift indicates a significant change in strategy among pharmaceutical firms, as they increasingly look to China for cost-effective innovation.

Experts suggest that this trend is likely to persist, with multiple factors contributing to it. One reason cited is the advanced development capabilities of Chinese pharmaceutical firms. These companies can produce effective drugs at a larger scale and at a lower cost compared to their American counterparts. Moreover, they are often able to initiate human trials more swiftly. This efficiency not only enhances their market competitiveness but also attracts buyers interested in licensing agreements, as reported by CNBC. Additionally, the limited availability of venture capital in China is pressuring biotech startups to pursue these agreements as a viable route for growth.

As American pharmaceutical giants continue to explore opportunities in China, the U.S. pharmaceutical landscape is undergoing a transformation that has never been seen before. According to data from DealForma, approximately 30% of Big Pharma acquisitions involving at least $50 million upfront in 2024 were associated with Chinese companies. This marks a notable increase from just 20% the previous year and nearly 0% five years ago, signaling a clear and substantial shift in investment strategy.

Alongside these developments, Field also addressed concerns surrounding U.S. tariffs. She explained that many pharmaceutical companies assemble their products domestically after sourcing materials or initial production overseas. This strategy raises important questions about how tariffs will affect the industry, particularly since these companies generally benefit from lower manufacturing costs. Field suggested that the majority of these businesses could absorb the increased costs associated with tariffs without significant repercussions. Notably, the topic of tariffs has not been prominently discussed during earnings calls this quarter, as companies approach the end of the reporting period.

In the context of these insights, we recently published a list titled 10 Best Pharma Stocks to Buy for Long Term Growth, where we assess AbbVie Inc. (NYSE:ABBV) in relation to other top pharmaceutical stocks ideal for long-term investment.

AbbVie Inc., a research-focused pharmaceutical company, is renowned for developing treatments for chronic diseases across various fields, including oncology, gastroenterology, rheumatology, dermatology, and virology. Recently, AbbVie reported impressive financial results, with earnings reaching $15.1 billion in fiscal Q4 2024, surpassing analysts' expectations by 5.6%. The company attributed its revenue growth to its ex-Humira portfolio, which saw an annual increase of over 18%, accelerating to 22% growth in Q4 alone.

Analysts are particularly enthusiastic about AbbVies two flagship medications, Skyrizi and Rinvoq. These drugs, which are used to treat a variety of inflammatory conditions, are projected to generate annual sales exceeding $27 billion by 2027. Furthermore, AbbVie announced a robust 5.8% increase in dividends, set to take effect in February 2025, maintaining the company's impressive 12-year track record of dividend growth.

Polaris Capital Management commented positively on AbbVie in its Q3 2024 investor letter, noting that U.S. biopharma companies are outperforming the healthcare sector overall, with AbbVie showing strong growth in its immunosuppressive drug line. The management team is actively transitioning patients from Humira to its newer medications, mitigating the impact of the loss of exclusivity on Humira.

In conclusion, AbbVie currently ranks fourth on our list of the best pharmaceutical stocks for long-term investment. While there is considerable potential within the pharmaceutical sector, some analysts express a stronger belief in the capacity of AI stocks to deliver even higher returns in a shorter timeframe. For those interested in AI investments, there is a particular AI stock that has shown promise since the start of 2025, while other notable AI stocks have seen declines.

For more information, check out our reports on the 20 Best AI Stocks to Buy Now and the 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.