Analyst reactions to Donald Trump’s election victory were mixed Wednesday, with potential positives including an FTC that is likely to be more friendly to M&A, and negatives including concerns about what role Robert F. Kennedy, Jr. might play in healthcare.
With the U.S. electing Donald Trump to a second presidential term, biopharma analysts were cautiously optimistic Wednesday about the prospects for the sector—while sounding the alarm over Robert F. Kennedy, Jr.’s potential to gain a powerful position in the new administration.
BMO Capital Markets saw Trump’s victory as a “modest positive” for the sector but said in an investor note that “the one exception and (recent) concern for the industry, is the possibility of Robert F Kennedy, Jr. in a ‘big role’ in healthcare in the future administration.” The analysts called this a “significant negative” for biopharma, given Kennedy’s “prior antivaccine rhetoric,” but noted that who will actually head the healthcare agencies remains to be seen.
STAT News reported that while Kennedy has said he might have control over HHS, which encompasses the FDA and CDC, Howard Lutnick, co-chair of Trump’s transition team, said on CNN that Kennedy was “not getting a job for HHS.”
Jefferies analysts said in an investor note that Republican wins have historically been positive for healthcare and quoted Quant strategist Desh Peramunetilleke as saying that “the FTC [Federal Trade Commission] under Trump’s administration will be more friendly towards M&A.”
Mizuho healthcare strategist Jared Holz pointed to the possible departure of Federal Trade Commission chair Lina Khan, who has taken a stricter stance on M&A during her tenure, under Trump. “Whether or not Lina Khan is bounced day one is a key consideration, but even if fewer changes at the FTC take place, there is no doubt this administration—at least on paper—will be far more amicable when it comes to business combinations,” Holz wrote in an investor note, according to Endpoints News.
Leerink Partners analysts agreed that a second Trump administration would be “positive for smid-cap [small- to mid-cap] biopharma M&A prospects since FTC would likely be more accommodating,” but said they saw Trump’s victory as “mixed” for large-cap biopharma “since it creates potential uncertainty regarding FDA independence.”
Another key issue for biopharma over the last two years has been drug price negotiations under the Inflation Reduction Act (IRA). In Wednesday’s note, BMO Capital Markets analysts said a Trump victory would signal to the market that “the IRA will likely not be expanded and may be deprioritized for funding considerations.”
Regarding the IRA, Peramunetilleke said there could be revised guidance or adjustments to how the Centers for Medicare and Medicaid Services (CMS) thinks about the pricing process—specifically regarding recognizing generics/biosimilars, bona fide marketing and orphan drug designation rules, according to Jefferies.
As for a second Trump administration’s impact on pharmacy benefit managers (PBMs)—the powerful prescription drug middlemen—BMO Capital Markets said we could see some reform. “If Trump opted for a more populist agenda, we could see continued pressure on drug pricing, or at a minimum keeping the status quo with the current IRA negotiations,” according to the note.
