The new US president is preparing to dismantle the US healthcare system and has recently issued a Twitter tirade against drug pricing. So surely this is a bad time to buy healthcare stocks?
Quite the opposite, says Sven Borho, manager of IC Top 100 Fund Worldwide Healthcare Trust (WWH). The biotech sector is cheaper than it has been in over 20 years and while political storms rage above it, Mr Borho says healthcare companies are gearing up for a merger and acquisitions (M&A) frenzy, which could benefit investors.
Biotech and healthcare stocks were punished in the second half of 2016 due to presidential candidate Hillary Clinton's comments on drug pricing. The Nasdaq Biotechnology index fell 6 per cent in sterling terms over the 2016 calendar year (21.4 per cent in dollar terms) and now stands on a rare discount to the S&P 500 index. This year President Trump has set out to repeal the Affordable Care Act and replace it with a new vision of US healthcare, and last week he sent biotech stocks into a nosedive with a Tweet pledging to take on high drug prices.