Donald Trump’s victory in the U.S. presidential election sent shock waves across financial markets, sending markets tumbling on Wednesday before rebounding. But there were a few clear winners of the day, mainly stocks in the health care sector.
While some industries stand to lose big time under a Trump presidency, others are expected to thrive. These three health care sectors are expected to benefit from the president-elect’s proposed policies.
Biotech and Pharma
Biotech and pharma companies are already benefiting from Trump’s victory with shares in these two sectors surging one day after the election.
Pharmaceutical and biotech companies have been under pressure amid backlash from Washington over price increases for life-saving drugs. Investors are hoping that Trump won’t focus on high drug prices, something Hillary Clinton, Bernie Sanders and other Democratic Party members said would be a priority.
Shares of Merck & Co. (MRK, Financial), Mylan (MYL, Financial), Pfizer (PFE, Financial), Gilead Sciences (GILD, Financial) and Allergan (AGN, Financial) all surged more than 5% on Wednesday after news of Trump’s victory set in.
Still, Trump has proposed that the U.S. should allow the import of drugs from “providers that offer safe, reliable and cheaper products.”
The importing of drugs from overseas is something the pharmaceutical industry fiercely opposes. Trump has also called for Medicare to negotiate with drugmakers, another move that would hurt the bottom lines of most drug companies.
It is still too early to tell whether drug companies will truly benefit from a Trump presidency. If his proposed ideas remain just that – ideas – the pharma industry may benefit greatly if prices aren’t scrutinized.
Medical Equipment and Supplies
Some types of medical equipment are already covered under Medicare and certain health insurance policies. But Trump’s proposals for health care may put more money in the pockets of Americans – money that can be used to purchase necessary medical equipment.
Under Trump’s proposed health care reform plan, Americans can deduct the cost of health insurance premiums on their tax returns. He has also proposed that individuals have the option of using HSAs (Health Savings Accounts), which allow tax-free contributions and can be used for costs of care and equipment.
Companies that provide medical equipment and supplies, such as Medline, Avacare Medical and Allied may benefit from Americans having more money to spend on vital health care supplies.
Health Insurers
Health insurance companies can benefit from a Trump presidency in a few ways. For starters, the president-elect has vowed to repeal Obamacare, which has sent premiums soaring and costs higher for insurance companies. It’s still uncertain what type of system will replace the ACA, but insurers are likely to come out ahead if solutions like health care savings accounts are implemented.
Trump has also proposed allowing insurers to sell coverage across state lines, which would allow insurance companies to expand their reach while giving Americans more coverage options.
While still speculative at this point, these three health care sectors are poised to benefit from Trump’s proposed policies – if they pass. The repealing of Obamacare may impact the industry in unexpected ways, but measures that lower costs will ultimately give Americans more access to affordable health care and boost the bottom lines of health care-related companies.
Disclosure: Jacob Maslow does not have any interest in the stocks mentioned.
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