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In response to Donald Trump’s presidential victory, global markets are falling fast. Life science stocks seem to be the exception.
In response to Donald Trump’s presidential victory, global markets are falling fast: Japan’s Nikkei index lost over five percent, the London Exchange dropped two percent and the ASX saw a market loss of $35 billion. Life science stocks, along with gold, seem to be the exception: they actually rose on the FTSE this morning, following news of Trump’s victory.
Gold’s bullish behavior in the midst of this upheaval is unsurprising: it traditionally rises in volatile market conditions. That response is not characteristic of pharma or biotech stocks, however.
So what gives?
Put simply, pharma and biotech stocks seem to be responding more to Clinton’s defeat than to Trump’s victory. The Democratic candidate has put pressure on life science stocks since 2015, when her tweet about pharmaceutical price gouging led to a $132 billion loss from the biotech and pharma sectors. Throughout her campaign, Clinton repeatedly vowed to limit the power of drug manufacturers and suggested introducing monetary penalties to punish price gouging.
As polls predicted her victory, pharma and biotech generally stocks fell further. Today, they are rallying once more: major drug manufacturers, like Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE), Novartis (NYSE:NVS) and Roche (OTC:RHHBY), are all seeing gains in pre-market trading.
Biotechs are performing similarly well, with Celgene (NASDAQ:CELG), Amgen (NASDAQ:AMGN) and Gilead (NASDAQ:GILD) gaining before the opening bell.
That’s interesting, given Trump has also denounced the power drug companies currently hold in the United States. He wants pharmaceuticals manufactured abroad to be sold domestically, in an effort to introduce competitive bidding and bring prices down. He has also insisted that Medicare be empowered to negotiate drug costs.
“He’s honestly and forthrightly calling Big Pharma on its Big Baloney,” physician Charles D. Rosen said in Stat, back in July 2016.
Despite this, the pharmaceutical and biotech markets have seemed more afraid of a Clinton presidency—perhaps because the Republican party doesn’t agree with their President-Elect’s views on drug pricing.
So, will Trump’s victory make the life science market great again?
Time will tell. Although biotech and pharma stocks are rallying after a rough year, Trump’s win does not mean they’re out of the woods yet. As other sectors plummet, investors are seeking refuge in life science stocks … but there’s no guarantee this embattled industry will continue to perform well after today.
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Securities Disclosure: I, Chelsea Pratt, hold no direct investment interest in any company mentioned in this article.