- With president-elect Donald Trump promising to “repeal and replace” the ACA, hospital and health systems stocks stand to lose under the new administration, Fortune reports.
- At the same time, Trump’s relative silence on drug prices has left pharmaceutical companies feeling bullish about the next four years.
- Payers, many of which have pulled out of ACA health exchanges, may also see a bump in a Trump administration, according to Fortune magazine.
While Trump has threatened to do away with — or at least amend — Obamacare, he hasn’t offered any real details on his own health plan. But the loss of health insurance for 20 million newly covered patients, or a substantial portion of them, could leave hospitals with a lot of empty beds.
On the day following the election, Tenet Healthcare’s shares dropped 25%, according to Fortune. The downturn also hit companies like Varian Medical Systems, which supply hospitals with medical equipment. Manufacturers that get a major portion of their revenues from outside the U.S. — like Varian, a manufacturer of advanced radiotherapy devices for treating cancer — are less likely to be affected if Obamacare goes away.
As for health insurers, Fortune’s Jen Wieczner says portfolio managers like United Health Group because it has mostly exited the state exchanges and is not involved in a merger or related antitrust challenge. It’s not known if Trump’s Justice Department will be as aggressive in going after megamergers as President Obama’s has been.
Meanwhile, Margaret Vitrano, managing director of ClearBridge, gives a thumbs up to biotech firm Celgene. The company’s blockbuster multiple myeloma drug Revlimid and other therapies are deriving growth from an expanding patient pool rather than price increases, Wieczner notes. And it has 24 therapies in clinical trials.
Pharma companies also stand to gain from the 21st Century Cures Act, which has a number of provisions aimed at speeding up drug approvals. The legislation passed the House late Tuesday and it will be headed to the Senate on Wednesday.
Fortunes top three healthcare picks for the coming year:
- Varian Medical Systems
- United Health Group