SA Asks: How will the U.S. election results impact healthcare stocks?
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Now that Election Day is over, investors will be eager to find out how the results will impact specific sectors.
Which brings us to our latest SA Asks question: how will the U.S. election results impact healthcare stocks?
We asked Seeking Alpha analysts ONeil Trader, BioCGT Investor and Avisol Capital Partners to weigh in with their thoughts.
ONeil Trader, Investing Group Leader for Growth Stock Forum: The Trump administration is likely going to be somewhat more lenient toward the biotech industry than the Biden administration was or than the Harris administration would have been. We are likely to see reduced FTC pressure on M&A transactions and continued verbal pressure on drug prices, but without meaningful negative changes on the legislative side.
The wild card is the potential appointment of Robert F. Kennedy, Jr. to an important healthcare position and the uncertainty it brings given his anti-vaccine position. This could be a negative for biopharma companies developing vaccines.
BioCGT Investor: President-elect Trump stated his intention to reduce the cost of drugs by promoting choice, competition and transparency. In this term, Trump is not expected to expand the IRA Act, but given its attempt to push drug prices down in the U.S., I would not expect him to support the repeal suggested in Project 2025, either, unless his team were able to put forward other cost-saving plans.
While the potential appointment of Robert F. Kennedy, Jr. to a key role in the U.S. Department of Health and Human Services is expected to promote large reforms in regulatory agencies such as the FDA, in the short term it would likely create uncertainty in the biotech/pharma sector.
Overall, Trump’s second term is unlikely to be more favorable for the healthcare and pharma sectors than the Democrats were in the previous term.
Avisol Capital Partners, Investing Group Leader for The Total Pharma Tracker: Garden variety biopharma companies will not be specifically impacted by this, although there may be a broad buoyancy in the market as the new president is elected. Pure-play insurance stocks like Humana (HUM) and Centene (CNC) may benefit, at least the short term.
Trump will repeal – if he gets control of both houses – the Patient Protection and Affordable Care Act (ACA), otherwise known as Obamacare. That could impact insurers and hospital operators operating in the poorer parts of the country. Pharma companies with overpriced drugs may breathe easier, or they may not, given Trump’s promise to ease on generic drugs – which will be good for Teva (TEVA).
Bottom line, Trump’s central beef is with Obamacare, and the broader biopharma/biotech industry doesn’t have a lot to worry about — unlike under a Harris presidency, where overpricing, price gouging and such practices would be verboten.