Top UK and European pharmaceuticals lose £11.6bn after Donald Trump press conference

Close to $25bn was wiped off the value of the S&P 500’s top nine pharmaceutical companies in a matter of minutes on Wednesday

Zlata Rodionova
Thursday 12 January 2017 11:15
Donald Trump calls for change to curb Big Pharma

Donald Trump’s scathing comments about the pharmaceutical industry, which wiped billions of dollars off the US healthcare market on Wednesday, are sending shockwaves through the sector on this side of the Atlantic on Thursday.

In his first media conference since November’s vote, the President-elect on Wednesday accused US firms of “getting away with murder”.

Almost $25bn was wiped off the value of US pharma companies and close to £11.6bn was shaved off the value of their European counterparts in morning trade a day later. Investors are concerned that Mr Trump could introduce policies that will adversely affect the global healthcare market.

In the UK, shares in AstraZeneca were recently down more than 1 per cent, while shares in GlaxoSmithKline fell by almost as much. Dublin-based Shire, which specialises in drugs for attention deficit disorders and rare diseases, saw its shares fall 3.5 per cent.

In continental Europe, shares in Switzerland’s Novartis were down by nearly 3 per cent, while Tamiflu-maker Roche saw its shares fall around 2 per cent. That took the Stoxx Europe 600 Health Care index to a loss for the day of more than 2 per cent, extending its weekly decline to just over 3 per cent.

Jake Robbins, global equity fund manager, said: “Healthcare has been regarded as a growth sector due to favourable demographics driving growing demand, but pricing pressure will hit revenues, margins and earnings making the sector less attractive than previously believed.”

Caroline Simmons, deputy head of the UK Investment Office at UBS Wealth Management, said Mr Trump was becoming more vocal about bringing drug prices down, which will continue to have a big impact on European shares.

She told The Independent: “If Mr Trump wants to implement price controls or price caps it will have an impact on European companies, which have big exposure in the US. Unfortunately, shares will continue reacting to his rhetoric and this will in turn increase market volatility."

According to UBS Wealth Management, MSCI Europe healthcare has an average revenue exposure to the US of about 35 per cent. At a company level this ranges from negligible exposure to 75 per cent.

Shares in Johnson & Johnson, Pfizer, Merck, Amgen, AbbVie, Bristol-Myers Squibb, Gilead, Celgene and Eli Lilly, all fell between 1 and 5 per cent on Wednesday.

Speaking to members of the press for the first time since swinging to victory in hotly contested election battle in November, Mr Trump said: “We have to get our drug industry coming back. Our drug industry has been disastrous.”

“They supply our drugs but they don't make them here, to a large extent. And the other thing we have to do is create new bidding procedures for the drug industry, because they're getting away with murder”.

Mr Trump, who takes office in eight days, suggested during his press conference that there should be price controls.

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