More than half of the US population now takes prescription drugs, which has made rising drug prices a hot political issue. During the election campaign, Donald Trump suggested that Medicare would be given the right to negotiate the prices of medicines. This is of course also a key issue for the pharmaceutical industry, which through the lobby group PhRMA is lobbying intensively in Washington against any proposals that go in this direction, all to avoid price pressure on its products.
»They're getting away with murder.«
The president-elect did not mince words during his press conference when he accused companies in the industry of moving pharmaceutical production – and thus reducing the number of jobs in the sector – overseas, while the costs for the American healthcare system and taxpayers are skyrocketing due to rising drug prices. According to Trump, this is both an effect of the industry's lobbying activities in Washington and insufficient competition in the procurement of medicines in healthcare.
Immediately after Donald Trump's negative statements yesterday, the Nasdaq biotech index plummeted, and was down 3.67 percent early Wednesday afternoon. The iShares Nasdaq Biotechnology Index closed the day down 3 percent. The Standard & Poor's 500 Pharmaceuticals, Biotechnology & Life Sciences Index fell 1.7 percent.
During the election campaign, it was otherwise the Democratic presidential candidate Hillary Clinton who excelled in attacking pharmaceutical companies and criticizing rising drug prices. Many in the industry therefore smelled a brighter future for the sector after Donald Trump's election victory, hoping that Trump would be more friendly to pharmaceutical companies. The general relief at the prospect of avoiding Clinton's promised stricter regulation of drug prices therefore initiated a veritable relief rally with sharply rising stock prices in the sector when it turned out that Donald Trump unexpectedly emerged as the election winner.
Yesterday's statements, however, show that Trump is more than willing to take over Clinton's role as the one who will save the American public from skyrocketing drug prices - and he is also known to not shy away from pointing out individual companies as culprits via venomous Twitter posts or sharp statements in the media, something that includes aircraft manufacturers. Boeing and Lockheed Martin and the car manufacturer Ford previously experienced, with sharp price drops for the companies' shares and negative publicity as a direct result.
Note: The Danish pharmaceutical giant Novo Nordisk falls more than 5 percent during Thursday morning trading, likely linked to Trump's speech. In addition, American lawyers have filed a lawsuit against the company, which is accused by a local pension fund of having presented misleading profit forecasts. Novo Nordisk is the largest company in the Nordic region and share price movements have a major impact on the Copenhagen Stock Exchange.
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