Is Trump Going to Kill Pharma and Valeant Stocks?
President-elect Donald Trump may not be the friend that the pharmaceutical industry had hoped for. Despite gaining in the early days following his election, the NASDAQ Biotechnology Index is down three percent on Wednesday as Trump vows to reduce drug prices. Among shares hit the hardest is Valeant Pharmaceuticals Intl Inc (NYSE:VRX) stock, down more than three percent.
The source of Wednesday’s troubles for Valeant stock and other pharma industry shares is a Time magazine interview in which the President-elect expressed his displeasure over high drug prices.
“I’m going to bring down drug prices. I don’t like what’s happened with drug prices,” said Trump, according to a transcript of the Time interview. (Source: “Trump Vows to ‘Bring Down Drug Prices’; Biotech Stocks Fall,” Bloomberg, December 7, 2016.)
With this, the companies that at first thought the new administration would be a boon to their business (as reflected by the stock market) have now had second thoughts.
Pharmaceutical corporations like Valeant have been in the news a lot lately for price-hiking hijinks. Who could forget the progenitor of the term “Pharma Bro” Martin Shkreli, whose company raised the price of a drug used to fight AIDS-related illnesses by 4000%? Or when Mylan NV (NASDAQ:MYL) increased the price of an “EpiPen” from $100.00 to $600.00?
All in all, it’s been a rough year for the pharmaceutical industry, especially in regards to public relations. While Trump was thought to be a pro-business president, his comments to Time mark a return to the populist will that won him the election.
Valeant stock especially is hardly in a position to take the hit. Between numerous investigations and failed sales, the last thing the company needs on top of that is an unfriendly U.S. president.
Several pharmaceutical company executives have claimed to put caps on their price hikes, like Novo Nordisk A/S (ADR) (NYSE:NVO) CEO Lars Rebien Sørensen and Allergan Plc (NYSE:AGN) CEO Brent Saunders. Whether that will be enough to reduce the damage done to the industry as a whole is yet to be seen.