President-elect Donald Trump’s nomination of Robert F. Kennedy Jr. as secretary of the Department of Health and Human Services has the potential to upend investments in pharmaceutical and health care firms, particularly within the short term, in accordance with analysts.
Investors are especially frightened that Kennedy’s vocal hostility to vaccines could impact the underside lines of the businesses that make them. Immediately after the announcement of his nomination last week, the stocks of BioNTech, GSK, Moderna, Novo Nordisk and Pfizer dropped on Friday, in accordance with the Wall Street Journal.
Sel Hardy, senior vp of equity research at CFRA Research, says volatility in health sector stocks is to be expected within the near term as investors attempt to digest the implications of an unknown quantity like Kennedy — a nephew of former President John F. Kennedy — running a significant government department.
“We’ve never seen RFK in an analogous position before. We do not know at this point what he’ll fully prioritize,” she says. “My expectation possibly that he may focus initially on topics like food and supplements — topics where he might need broader support.”
Wall Street appears to be considering this possibility, too; stocks of major processed-food firms like PepsiCo and Coca-Cola fell following Trump’s announcement.
If confirmed, Kennedy’s appointment would put him on the helm of an unlimited department that oversees a variety of other agencies and divisions including the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration in addition to the Centers for Medicare & Medicaid Services — spending for which is chargeable for the majority of the department’s $1.7 trillion budget.
Ordinarily, with a Republican within the White House and the party controlling each chambers of Congress, investors’ expectation can be for a more business-friendly climate attributable to the party’s traditional aversion to a sturdy regulatory regime. Nevertheless, the populist streak running through Trump’s inner circle — Vice President-elect JD Vance has praised Biden-appointed Federal Trade Commission Chair Lina Khan for her aggressive regulation of Big Tech — in addition to Trump’s unorthodox picks corresponding to Kennedy make the tea leaves of this 12 months’s election more difficult for Wall Street to read.
Unorthodox pick, unknown consequences
Specifically, Hardy says, big pharma and biotech firms weren’t expecting Kennedy. Although the previous Democrat can have to be confirmed by the Senate before he can take the reins at HHS, political research firm Beacon Research suggests this end result is probably going. Beacon Research notes, though, that no matter whether Kennedy winds up on the helm of the HHS, he’s prone to have an effect.
“Even when he doesn’t get confirmed, he can still have a big role within the White House as a health czar,” they wrote. As an unofficial advisor, having the ear of the President could give him wide-ranging influence.
Jared Holz, health care equities strategist at Mizuho, put it more bluntly in a recent research note, writing, “The mere undeniable fact that [RFK] is within the conversation is a scary proposition for health care equities.”
The FDA has control over the commercial and sale of medicines and vaccines, and the CDC issues recommendations about vaccines for youths and adults. Kennedy has advanced debunked theories linking childhood vaccinations to rising rates of autism and related neurological disorders. Some on Wall Street note that just giving Kennedy such a distinguished bully pulpit could impact the fortunes of vaccine makers, no matter guidance or regulatory intervention.
Jefferies equities analyst Michael J. Yee told Genetic Engineering & Biotechnology News that a presence on the HHS could elevate Kennedy’s anti-vax stance to a wider audience.
“When it comes to childhood vaccines, RFK has been vocal on their safety and most significantly on the premise that they cause autism… All of this together could negatively impact vaccine perception within the US,” the publication reported Yee said, adding that this might have broader public health consequences, as well, if vaccine skepticism is prevalent enough to forestall the herd immunity that suppresses outbreaks.
One other X-factor for drug firms is the extent to which the incoming Trump administration could alter the federal government’s years-long initiative to negotiate lower prices for expensive Medicare drugs under the Inflation Reduction Act. While Trump has been vocally critical of other elements of the IRA, particularly those related to green energy initiatives, analysts note that each candidates talked about high prescription drug costs while on the campaign trail.
“There was already bipartisan agreement on lowering drug costs,” Hardy says.
Specifically, some have suggested that the favored class of GLP-1 weight-loss drugs, corresponding to Ozempic, could possibly be affected by a Kennedy-led HHS. Kennedy has criticized counting on these drugs as a way to drop pounds (a stance that has itself been criticized for stigmatizing obesity).
Holz wrote, though, that each the prevalence of obesity and increasing adoption of GLP-1 drugs are prone to outweigh the impact of Kennedy’s criticism, even when he’s in a significant decision-making position.
“Demand is sky-high and can remain as such until behavioral patterns improve amongst other major changes,” he wrote. “Don’t expect drug revenue growth to taper off in any respect.”
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