Pharmaceutical stocks surged today after Donald Trump won the U.S. presidential election, as investors concluded the threat of action on drug pricing had lessened. California’s Proposition 61, which would have prevented the state of California from purchasing drugs from a manufacturer for a price higher than that paid by the U.S. Veterans Affairs Dept., failed to pass, further encouraged investors.
U.S. pharmaceutical and biotech stocks traded higher in pre-market activity; Mylan (NSDQ:MYL), which came under intense scrutiny for its 500% price hike on the EpiPen auto-injector, was up 7.6% at $39.91 per share.
Shares in European drug-makers were up about 3% yesterday afternoon and healthcare was the biggest sector gainer in Europe following Trump’s victory. The Stoxx 600 healthcare index was up 2.8% by 1:30 GMT, according to Reuters.
Novo Nordisk (NYSE:NVO), the Danish insulin maker, has come under fire in the U.S. for its drug prices and told the news outlet that it welcomed the California ballot news, but that it’s “unpredictable” what a Trump presidency will mean for the industry.
Democratic nominee Hillary Clinton criticized the pharmaceutical industry for more than a year, leading to concerns that a Clinton win would mean more regulation of drug pricing. “The market has fretted about the prospect of a Clinton presidency and what that may mean for drug pricing,” Neil Woodford of Woodford Investment Management wrote in a blog post, according to Reuters. “Now the outcome is known, the prospect of drug pricing legislation is off the agenda.”
Trump has been less vocal about the pharmaceutical industry, although he has supported importing cheaper drugs and also advocated for increased scrutiny over price hikes.
Marie Owens-Thomsen, chief economist at Indosuez Wealth Management, believes that it’s too simplistic to view Trump as the good news candidate for the industry. “He has made several statements that are also potentially harmful,” she said.
Trump’s pledge to repeal Obamacare could also have consequences for drug prices. Zuercher Kantonalbank analyst Michael Nawrath told the news service that there is a lot of uncertainty as to how Trump will repeal the Affordable Care Act. “He’ll clearly have advisers helping him. We’re going to have to see which proposals emerge,” Nawrath said.
Shares in major European drug-makers like Roche (PINK:RHHBY) rose between 1% and 4%. Roche said it believes the U.S. to be a rewarding market. “Roche is focused on developing innovative medications and diagnostic tests and we are convinced that the U.S. will continue to value and support innovation and medical progress,” the company said.
MYL shares opened today at $40.21, up 8.3%.