The post-election biotech honeymoon is over. Shares of the iShares Nasdaq Biotechnology ETF IBB are down more than 3.6% in morning trading Wednesday following a new warning from President-elect Donald Trump that he will indeed be targeting high drug prices.
Immediately following the election, IBB soared more than 9% as investors assumed that Trump would be much less likely to crack down on exorbitant drug price hikes than Hillary Clinton. After all, Clinton had put drug prices at the forefront of her campaign, while Trump is typically an outspoken supporter of deregulation.
In an interview with Time, which recently named him its “Person of the Year,” the president-elect promised to lower the cost of costly medications and suggested that investors may have misread his intentions.
“I’m going to bring down drug price,” Trump told Time. “I don’t like what has happened with drug prices.”
Trump’s warning was, as usual, concise and vague, but the message clearly resonated with biotech investors. Companies with existing price scandals, such as Mylan , felt the brunt of the sell-off today, while ETFs like IBB and the SPDR S&P Biotech ETF XBI highlighted the range of the trading.
Interestingly enough, Trump’s has previously promised to roll back FDA regulations to make things easier for companies to do business. It looks like Trump’s FDA promises could be more focused on food and farming regulations now, as a move to bring drug costs down would imply some sort of intervention in the pharmaceuticals industry.
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