Shares of vaccine makers slumped in premarket trading, extending losses for a second day after President-elect Donald Trump nominated Robert F. Kennedy Jr. as the Secretary of Health and Human Services. Wall Street analysts told clients this development has sparked vast uncertainty across the biotechnology sector.
However, making America healthy again will require a complete overhaul of the FDA and USDA. Kennedy could dismantle the longstanding cozy relationships between big pharma and the federal government during Trump’s second term. This very prospect spooked vaccine stocks in premarket trading in New York, extending losses from Thursday.
US Premarket:
- Moderna (-2.2%), Novavax (-2.6%) and BioNTech (-2.1%) extended losses from Thursday’s decline
EU Cash:
- In Europe, shares of European vaccine makers such as Sanofi and GSK traded lower
“Healthcare/Pharma in focus this morning (GSXEPHAR), following Robert F Kennedy being confirmed as Trump’s nominee for health secretary which sparked a pharma and specifically vaccine makers sell off into the close yesterday. To this point, Kennedy has been vocal on vaccines in the past, seen as one of the most prominent anti-vaxxer’s in the US. Hence witnessing a -3sd move in our Pharma basket,” Goldman’s Martin Ehigiator told clients on Friday morning.
Deutsche Bank analyst Emmanuel Papadakis told clients this morning that his team slashed GSK’s rating to “Hold” following the news.
“We consider vaccines to be amongst the greatest scientific achievements to impact public health: unfortunately this view is not shared by the nominee,” Papadakis said.
Kennedy’s track record of questioning experimental mRNA vaccines and taking on government bureaucracies overseeing the vaccine industry has caught the attention of many Americans…
He stated earlier this year:
“Something is wrong with that whole system …
“When you feed a baby, Bobby, a vaccination that is like 38 different vaccines and it looks like it’s meant for a horse, not a10-pound or a 20-pound baby… do you ever see the size of it, its massive, then you see the baby all of a sudden starting to change radically. I’ve seen it too many times.”
And, of course, Kennedy taking on big pharma’s corruption in federal agencies and the entire public health sector is just bad news for profits. Wall Street analysts outlined this very clearly to clients (courtesy of Bloomberg):
RBC Capital Markets
- Analyst Brian Abrahams says Kennedy’s selection may have “far- reaching and difficult-to-project implications for the biotechnology sector”
- This, Abrahams says, adds a “considerable layer of uncertainty and challenging investability until there is greater clarity on his likelihood of actually gaining the role, his directives, and who else will lead the other key federal healthcare agencies”
- There is uncertainty over whether Kennedy will ultimately take the role, and that could mitigate potential risks, though Abrahams says it looks “more likely than not he will”
JPMorgan
- Analyst Chris Schott says it is difficult to evaluate the exact impact Kennedy would have on the biopharma industry at this point, but is not surprised the sector has come under pressure due to Kennedy’s previously stated views
- With the HHS secretary overseeing organizations with around 80,000 employees along with various federal and state laws, Schott expects it would take time to enact major changes
Wells Fargo
- Analyst Larry Biegelsen says Kennedy’s recent policy ideas are not focused on medtech; this could result in the sector “being relatively well positioned within healthcare”
- However, while current policy ideas do not directly impact devices, they “may indirectly or they could in the future,” Biegelsen says
- For example, Kennedy’s concerns about vaccines may “lead to a reduction in vaccination rates which would negatively impact device companies that make the syringes for vaccines,” Biegelsen says
TD Cowen
- Analyst Rick Weissenstein says he continues to believe Kennedy will not be confirmed by the Republican-controlled senate, but notes Trump could use a recess appointment to get him into office
- “If Trump manages to make a recess appointment, RFK Jr.’s term would only last for about two years at the most, though Kennedy Jr. could be appointed again through the same recess appointment or through the regular senate confirmation process”
RBC’s Abrahams noted, “Whether RFK ultimately takes the seat is still uncertain,” adding, “The Senate may push back.”
Kennedy founded the nonprofit Children’s Health Defense about a decade ago, one of the most well-funded organizations focusing on children’s health.
Meanwhile, CNN’s Sanjay Gupta melted down over Kennedy’s new possible role to head up HHS.
“I can’t think of any single individual who would be more damaging to public health than RFK,” Gupta said.
In other words, Kennedy would disrupt and ban big vaccine companies from controlling the airwaves with advertising dollars, and in return, ad revenues for CNN and other MSM outlets would plummet.
Also, Stephen Colbert threw a tantrum overnight because this meant the late-night show’s ad revenues from big pharma would implode.
Colbert was big pharma’s cheerleader.
Why does the only remedy for illness always seem to be vaccines and medicines from big pharma? Well, it’s a big business. Eating healthy and exercising doesn’t make Wall Street money. It’s time for reform.