Trump calls for "bidding" process with drugmakers to lower cost of medicines

Shares in drugmakers fell Wednesday after US President-elect Donald Trump suggested that the pharmaceutical industry would be forced to bid for government business. "They are getting away with murder. Pharma has a lot of lobbyists and a lot of power and there is very little bidding," Trump remarked, adding "we're the largest buyer of drugs in the world and yet we don't bid properly and we're going to save billions of dollars."

During a press conference, Trump also promised to get drugmakers to return to the US as many have relocated in order to benefit from lower taxes. "Our drug industry has been disastrous, they're leaving left and right," Trump commented, adding "they supply our drugs but they don't make them here, to a large extent."

Although Trump did not provide specifics on his plans, during the election campaign he backed allowing price negotiations for drugs by the Medicare programme and also supported the idea of letting consumers re-import medicines from abroad. 

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Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) commented "we look forward to working with the new administration and Congress to advance proactive, practical solutions to improve the marketplace and make it more responsive to the needs of patients". Meanwhile, the US Senate is slated to vote later this week on a budget resolution that would grant the government the authority to negotiate drug prices on behalf of Medicare. 

Shares in a number of drugmakers fell on the news, including a decline of as much as 5 percent for Alexion Pharmaceuticals. Additionally, shares in Endo International were down as much as 8.6 percent, while those in Mallinckrodt fell more than 7 percent. Shares in Perrigo dropped more than 6 percent. 

Commenting on the news, ThinkMarkets analyst Naeem Aslam said we expect the US biotech and pharmaceutical sector to be very volatile in the coming days and any mergers and acquisition will not be that easy. Janlyn Capital managing director Andre Bakhos added "in times like this the expectation is for an erratic, choppy environment, however we have not got anything earth shattering." 

Earlier this week, Trump called for an immediate repeal of the Affordable Healthcare Act followed by swift replacement. 

For related analysis, see Spotlight On: Diversification, M&A and continued US pricing pressure likely to shape pharma in 2017, argue industry executives.

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