Health care stocks fell last week after President-elect Donald Trump nominated Robert F. Kennedy Jr. to lead the nation's top health agency.
Vaccine makers like Moderna (MRNA) are down more than 5%, and big names like Pfizer PFE (PFE) are down about 2%. Some Wall Street analysts believe the slide is an overreaction, given that little is known about Kennedy's actual controversial policies and that he has not yet been confirmed by the U.S. Senate. Mr. Kennedy said it was too early to tell whether or how much of an impact it would have on the health sector.
If confirmed as Secretary of Health and Human Services, Kennedy will oversee the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) and become director of the Centers for Medicare and Medicaid Services (CMS).
JPMorgan healthcare analyst Chris Schott said in a note to clients that the sector is in a “period of greatest uncertainty” until cabinet positions are filled and more information about Kennedy is revealed. He said he would face it. But Schott added that this also means that large-cap stocks overall are currently trading at a 35% discount to the S&P 500, leaving room for future upside rather than further downside trading.
In a note to clients, Jared Holtz, a health care expert at Mizuho, said he agreed with some of the big-picture issues Kennedy identified, including the U.S. obesity epidemic and the dangers of ultra-processed foods. .
“This country should be much healthier than it is now, and there is a lot of room for improvement, including in nutrition, food production, and consumption. This is a very complex topic, and always has been,” Holtz said. said.
Here's some of what we know about Kennedy's views on key medical topics.
Vaccines: President Kennedy, known as an anti-vaxxer, has some Wall Street analysts wondering about the impact he could have on the vaccine industry and how it could affect childhood vaccination schedules. He questioned the necessity of vaccinating children and refused to receive the COVID-19 vaccine. So are the regulatory processes for testing and approving vaccines and other treatments. There is also speculation that he and President Trump's government efficiency chiefs, Elon Musk and Vivek Ramaswamy, could gut the FDA. Vaccine stocks have been hit the hardest, even though President Kennedy previously said he was not “taking away” anyone's vaccines.
GLP-1: RFK said he does not believe weekly injections are the solution to this country's obesity problem. It's unclear whether he could derail GLP-1 manufacturers' current efforts to get the drug covered by Medicare, which currently does not cover obesity. The companies are studying the drug's effects on obesity-related conditions such as heart disease and sleep apnea, which are covered by Medicare, so federal funds will be used to purchase them. A recent report found that Medicaid, also under President Kennedy's jurisdiction, contributes more to injectable drug sales than employer-sponsored insurance or commercial insurance plans. Some analysts say Mr. Kennedy's position could limit access and coverage of medicines and affect the fortunes of market leaders Eli Lilly (LLY) and Novo Nordisk (NVO). I'm concerned. But Holtz said, “Despite RFK's comments pointing out that Americans should use other non-drug treatments to lose weight, GLP-1 will be the largest treatment category by a wide margin.” I still believe that.”
Drug pricing: President Kennedy, with oversight of the Centers for Medicare and Medicaid Services, will have a chance to negotiate more aggressively with drug companies than the Biden administration. That is, of course, if the Trump administration chooses to continue exercising the new powers established by the Inflation Control Act (IRA). “President Trump remains focused on this issue and may seek to 'reach a better deal' through IRA negotiations than the Biden administration,” Leerink Partners said in a note.
Food Regulation: President Kennedy has been vocal about prioritizing regulation of ultra-processed foods. Research shows that these foods contribute to obesity in this country. This is a policy that current FDA Commissioner Robert Califf has already stated, and the agency is considering issuing new rules on labeling and developing better research on the effects of these foods. Although this issue is more of a concern for food stocks than health care, it is related to his stance on obesity and GLP-1. It's unclear how Kennedy will approach the issue.
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