The Best BioPharma Plays Amid Uncertainty From Trump Comments

Pharma sector was hit following the comments made by President-elect Donald Trump who alluded to potential tightening of industry regulation.

At his first press conference since being elected, Trump said the pharmaceutical industry is “getting away with murder” in terms of product pricing. He asserted that “we need new bidding procedures.”

Leerink said lack of specifics on government negotiation of drug prices confirms a speculated overhang and reversed pharma/biotech rally.

“Without specifics on the kind of changes his administration or the Republican Congress may be planning, we expect this uncertainty to persist until we at least get some specifics,” analyst Seamus Fernandez wrote in a note.

Recommendations

Fernandez recommends companies such as Bristol-Myers Squibb Co BMY and AstraZeneca plc (ADR) AZN, which have greater and more durable pricing power and are focusing on categories like oncology and rare disease.

“We continue to believe that innovation, particularly innovation for deadly diseases like cancer, will continue to be rewarded,” Fernandez highlighted.

Further, the analyst expects more companies to come clear on average net price increases to shift the debate away from list price increases.

At last check, Direxion Daily S&P Biotech Bear 3X Shares LABD had fallen as much as 6.6 percent. Bristol-Myers shares were down 0.63 percent to $56.44, while ADRs of AstraZeneca marginally gained 0.28 percent to $28.26.