The future promise lifted stocks in major drug companies on both sides of the Atlantic on Monday, after U.S. lawmakers gave final approval to a sweeping healthcare overhaul at the weekend.

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Big Pharma will provide somewhat more in savings than the original $80 billion agreement under the latest version of healthcare reform but the bill passed by the House of Representatives creates 32 million more customers for the industry's products.

Crucially, the government will not impose drug price caps.

The amount they are paying, essentially in a tax, over a five to 10 year period is potentially more than offset by the increased volume that they have coming in, said Ben Yeoh, an industry analyst at Atlantic Equities.

It looks neutral, within forecast error, he said. There's relief that something has got through that drugmakers can live with.

Shares in Pfizer Inc, the world's biggest drugmaker, and Merck & Co Inc gained nearly 2 percent in early trade, while European companies GlaxoSmithKline Plc and AstraZeneca Plc, both heavily reliant on U.S. sales, also posted gains.

Sanofi-Aventis SA was an outlier, dropping 1.6 percent by 1415 GMT (10:15 a.m. EDT) following a setback for its heart drug Multaq in France.

Morgan Stanley analysts said the reform package would depress earnings per share at European pharmaceutical companies by up to 2 to 3 percent in 2011.

But this would be counteracted by a sharp increase in the number of insured patients and enhanced revenues from the Medicare programme for the elderly, the brokerage said. Drugmakers were unlikely to revise long-term earnings outlooks on the back of the news, it added.

ENDING UNCERTAINTY

Under the complex deal hammered out in Washington, the drugs industry will have to pay fees of $2.5 billion $3 billion from next year -- rising to a peak of $4.2 billion in 2018 -- and provide discounts to help ensure Medicare coverage.

Savvas Neophytou, an analyst at Panmure Gordon, put the cost to the sector at between 1.5 to 2.2 percent of EPS per year for the first five years but said the end to uncertainty should help sentiment.

Sunday's House vote ended a year-long political battle with Republicans over the vexed issue of healthcare reform and achieved a goal that has eluded many presidents for a century -- most recently Bill Clinton in 1994.

There's a sense that if no health reform had passed this time around, then everything would have got a really big kicking in three or four years time because, inevitably, something had to give, said Jack Scannell, an industry analyst at Sanford Bernstein.

Lawmakers also rejected an initial plan to end lucrative pay-for-delay settlements between brand-name and generic drugmakers -- a win for both groups of manufacturers.

The biotechnology industry, too, has reason to be thankful that the legislation was not worse.

A big fear for biotech investors had been that government would give generic alternatives a fast route to the market. In fact, makers of biotech drugs like Amgen Inc and Roche Holding AG's Genentech unit will still have a 12-year period of exclusive sales before facing competition from generic rivals.