Big Pharma stocks surged in the wake of the 2016 US Presidential elections, causing drug companies to breathe a sigh of relief after a year of restraint caused by Clinton’s plan to tackle high drug pricing.
The Stoxx 600 Healthcare Index rallied 3.5 percent in the 24 hours after Donald Trump’s victory was announced and according to Fortune magazine, healthcare was the biggest sector in Europe to benefit following Trump’s win.
On the London Stock Exchange, the British pharmaceuticals AstraZeneca and GlaxoSmithKline rose 1.76 percent and up 1.41 percent respectively. Novo Nordisk, the Danish pharmaceutical focused on diabetic care, spiked 6 percent.
During the presidential campaign, pharma was never one of the main topics. However, the Republican President-elect remained less critical of drug pricing than the Democrat candidate Hillary Clinton, who consistently thwarted investor interests with her proposal of lowering drug prices.
Trump’s main healthcare plan was to eliminate or dramatically modify the Affordable Care Act known as Obamacare, and this may now be easier to achieve due to the Republicans’ sweeping victory with both a Congress and Senate majority.
During his campaign, Trump hinted his support of importing cheaper drugs, negotiating the cost of medicine and evaluating the increase of drug costs. But price pressure is not going away, according to Pascal Soriot, chief executive of AstraZeneca. “Nobody knows what the new landscape will look like,” he told the Guardian. “It’s reasonable to assume it will change substantially.”
Republicans and Democrats share a stance against excessive drug pricing. Clinton was heavily critical of Turing Pharmaceutical’s 5,000 percent markup after acquiring a single license for 63-year-old off-patent drug pyrimethamine used to treat AIDS patients, labelling it “price gouging”. Trump, in turn, called Turing’s CEO Martin Shkreli a “spoiled brat”.
Clinton’s defeat also brought relief to biotechnology companies. With the crash of most markets, there might be a boost for biotech drugs. It is speculated that M&A deals may pick up from where they left off before the elections campaigns began.