Pharmaceutical stocks in Europe and the USA performed well following newly elected Donald Trump’s presidential victory and it’s likely that Trump’s proposed healthcare plan, which states that the Food and Drug Administration must be reformed to “put greater focus on the need of patients for new and innovative medical products”, has contributed to the good run in pharma stocks.
Erik Roos, CEO of Pharma Dynamics – a leading generics medicine provider in South Africa, says that this most recent plan sends a hint to the industry that it may be easier to get their products to market under his administration.
“While the overall messaging on pharmaceutical legislation under the Trump reign has been vague, this most recent plan does suggest a focus on optimising the registration process with the Food and Drug Administration (FDA). If that is the case, our local industry – that is currently in the process of ushering in the South African Health Products Regulatory Authority (SAHPRA) – could learn from the roll-out of this strategy.”
SAHPRA is the new regulatory authority set to take over from the MCC from April next year, since the MCC in its current form has struggled to cope with the volume of applications it receives for new medicines and clinical trials.
Roos does however flag that contradictory messaging during the electoral campaign could also lead to some uncertainty in the sector.
“Earlier this year Trump spoke about saving Medicare billions of dollars by getting the massive federal agency to negotiate better prices with major pharmaceutical companies. This messaging is more in line with his predecessor Barack Obama’s stance that prioritised cost reduction of medicine is the next step for healthcare in the USA.”
If uncertainty around future legislation for the pharmaceutical industry persists, it may drive some big players to set their sights on emerging markets such as Africa, he adds.
Furthermore, analysts predict that inflation will increase in the USA followed by interest rate hikes, which will put added pressure on the currencies of developing countries.
Roos says that this could put local medicine manufacturers and distributors under further pressure and may demand a review of the current Single Exit Pricing (SEP) and annual increase structure. Last year saw medicine prices increase by 4.8%
“At this stage no clear direction has been given by Trump, but with the US being a major player in the global pharmaceutical market, we are keeping a close eye on developments as they unfold,” concludes Roos.