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Drug Stocks Rally on Trump Meet with Pharma Bigwigs
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Pharma and biotech shares rallied yesterday following a meeting between President Donald Trump and industry leaders including CEOs of companies like Merck & Co., Inc. (MRK - Free Report) , Johnson & Johnson (JNJ - Free Report) , Novartis AG (NVS - Free Report) , Celgene Corporation , Eli Lilly and Company (LLY - Free Report) and Amgen Inc. (AMGN - Free Report) . The CEO of PhRMA (the Pharmaceutical Research and Manufacturers of America), which represents the country’s leading innovative biopharmaceutical research companies, was also present at the meeting.
While old issues like drug pricing and bringing manufacturing back to the U.S. were key points of discussion, corporate tax reforms, stronger trade agreements to level the playing field with countries around the world, removal of outdated regulations that drive up costs and slow innovation and the drug approval process were also areas of focus.
Control Drug Prices
Increasing drug prices have been under the scanner for quite a while now with the issue being a key focus area during the election campaign. Drug stocks, especially biotech companies, have been under intense pressure especially given Trump’s comments regarding the drug industry “getting away with murder”.
At the recent meeting, Trump said that “pricing has been astronomical” and emphasized that drug prices must be brought down. Trump had previously spoken about creating new bidding procedures that would help bring down prices. Competition is another way to help bring down prices.
We note that quite a few companies have taken the initiative to curb price increases. Last year, Allergan plc’s CEO Brent Saunders had announced that the company would not engage in price gouging actions or predatory pricing and would limit price increases to single-digit percentages no more than once a year. The company had announced other measures as well as part of its social contract with patients. Allergan is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Speed Up the Drug Approval Process
Trump also spoke about speeding up the FDA approval process. Last year, the number of new drug approvals slipped to 22, well below the 45 approvals in 2015 and 41 in 2014. The President said that the FDA will be streamlined and the drug approval process will be much faster. The recently signed 21st Century Cures Act is a step in this direction.
However, President Trump's memorandum ordering a freeze on the hiring of Federal employees provides low visibility on how this will impact the FDA. Concerns remain that a hiring freeze at the FDA will negatively affect development programs and the review of new drugs and medical devices.
Bring Manufacturing Back to the U.S.
Trump also laid emphasis on bringing manufacturing back to the U.S. He said that drugmakers should bring manufacturing and production back to the U.S. -- currently, several drugs or their active pharmaceutical ingredients are manufactured in countries like India and China. Trump said that he would work on cutting down regulations which would make the manufacturing process smoother in the U.S.
Trump also touched on lower corporate taxes with tax code reforms expected to spur investment.
Medical - Biomedical and Genetics Industry 5YR % Return
Both the NASDAQ Biotechnology Index and iShares Nasdaq Biotechnology were up 2.8% each while the NYSE ARCA Pharmaceutical Index gained 1.3% yesterday with shares rallying on talks regarding lower corporate taxes and a speedier regulatory process.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it >>
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Drug Stocks Rally on Trump Meet with Pharma Bigwigs
Pharma and biotech shares rallied yesterday following a meeting between President Donald Trump and industry leaders including CEOs of companies like Merck & Co., Inc. (MRK - Free Report) , Johnson & Johnson (JNJ - Free Report) , Novartis AG (NVS - Free Report) , Celgene Corporation , Eli Lilly and Company (LLY - Free Report) and Amgen Inc. (AMGN - Free Report) . The CEO of PhRMA (the Pharmaceutical Research and Manufacturers of America), which represents the country’s leading innovative biopharmaceutical research companies, was also present at the meeting.
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
While old issues like drug pricing and bringing manufacturing back to the U.S. were key points of discussion, corporate tax reforms, stronger trade agreements to level the playing field with countries around the world, removal of outdated regulations that drive up costs and slow innovation and the drug approval process were also areas of focus.
Control Drug Prices
Increasing drug prices have been under the scanner for quite a while now with the issue being a key focus area during the election campaign. Drug stocks, especially biotech companies, have been under intense pressure especially given Trump’s comments regarding the drug industry “getting away with murder”.
At the recent meeting, Trump said that “pricing has been astronomical” and emphasized that drug prices must be brought down. Trump had previously spoken about creating new bidding procedures that would help bring down prices. Competition is another way to help bring down prices.
We note that quite a few companies have taken the initiative to curb price increases. Last year, Allergan plc’s CEO Brent Saunders had announced that the company would not engage in price gouging actions or predatory pricing and would limit price increases to single-digit percentages no more than once a year. The company had announced other measures as well as part of its social contract with patients. Allergan is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Speed Up the Drug Approval Process
Trump also spoke about speeding up the FDA approval process. Last year, the number of new drug approvals slipped to 22, well below the 45 approvals in 2015 and 41 in 2014. The President said that the FDA will be streamlined and the drug approval process will be much faster. The recently signed 21st Century Cures Act is a step in this direction.
However, President Trump's memorandum ordering a freeze on the hiring of Federal employees provides low visibility on how this will impact the FDA. Concerns remain that a hiring freeze at the FDA will negatively affect development programs and the review of new drugs and medical devices.
Bring Manufacturing Back to the U.S.
Trump also laid emphasis on bringing manufacturing back to the U.S. He said that drugmakers should bring manufacturing and production back to the U.S. -- currently, several drugs or their active pharmaceutical ingredients are manufactured in countries like India and China. Trump said that he would work on cutting down regulations which would make the manufacturing process smoother in the U.S.
Trump also touched on lower corporate taxes with tax code reforms expected to spur investment.
Medical - Biomedical and Genetics Industry 5YR % Return
Medical - Biomedical and Genetics Industry 5YR % Return
Both the NASDAQ Biotechnology Index and iShares Nasdaq Biotechnology were up 2.8% each while the NYSE ARCA Pharmaceutical Index gained 1.3% yesterday with shares rallying on talks regarding lower corporate taxes and a speedier regulatory process.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it >>