Ignore Trump's Pricing Rhetoric With These 5 Biotech Picks
On Monday, President Trump stepped up the rhetoric on pharma companies, saying that his administration would soon take action to bring down drug prices. This is in keeping with promises he made on the campaign trail as well as comments made last year and during his State of the Union address.
Meanwhile, industry watchers have grown skeptical about Trump’s intermittent pronouncements on this issue. Also, key government databases which reveal the quantum of funds spent on healthcare have not been updated recently, raising questions on the administration’s seriousness about taking action.
Given this backdrop, it makes good sense to invest in select biotech stocks, especially those of small companies focusing on developing cutting edge treatment.
Drug Price Cuts around the Corner?
On Monday, Trump delivered a speech on the federal government’s initiatives to fight the country’s opioid addiction crisis at Manchester, New Hampshire. During his speech, Trump launched into pharma companies, raising the issue of exorbitant drug pricing once again.
Trump said that consumers in the United States were paying more for drugs than many other countries across the world and his administration would work toward changing that situation. The President said that citizens of the United States would witness “drug prices falling very substantially” but characteristically avoided mentioning any specifics.
Health and Human Services Secretary Alex Azar also pitched in during the event to reveal that an entire raft of proposals would be introduced to reduce the price of prescription drugs. Azar too refrained from mentioning concrete plans, choosing only to praise UnitedHealth Group Incorporated’s UNH decision to pass on discounts obtained from pharma companies to customers.
Skepticism on Concrete Action Abounds
Apart from the comments made on the election trail, Trump has called for strong action on drug prices intermittently. In November last year, when Trump appointed Azar to his current position, he claimed that the former chief of the U.S. arm of Eli Lilly and Company LLY would be “a star for better healthcare and lower drug prices.” Trump even chose to take up the issue during his State of the Union Address saying drug prices would come down during his tenure.
But little action has followed all this tough talk. A much discussed executive order on drug pricing has failed to materialize despite the fact that pharma companies have raised prices of several drugs during Trump’s tenure. Trump met leading pharma officials before completing his first month as President and even had them seated at this table at the World Economic Forum in Davos.
Further, Trump has hired several former pharma industry employees for his administration, including Azar, during whose tenure prices of several drugs increased more than 100%. Meanwhile the Department of Health and Human Services has failed to update databases which reveal the quantum of government funds spent on healthcare, including the costs of drugs.
This is proving to be advantageous for pharma companies since they can now avoid revealing details on drug pricing. This in turn affects efforts by researchers and non-profit groups who work toward lowering the prices of key drugs.
Our Choices
Industry watchers feel that pharma investors have gotten used to Trump’s rhetoric on drug prices and largely choose to ignore any such comments. Meanwhile, Trump has inducted several former pharma industry employees into his administration, appointing some to key positions.
This is why the outlook for pharma companies, especially those from the biotech industry focusing on unique treatments, remains undimmed. Investing in select biotech stocks looks like a good option at this point. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Biohaven Pharmaceutical Holding Company Ltd. BHVN is a biopharmaceutical company which focuses on the identification and development of orphan neurologic indications and other neurological pathways.
Biohaven Pharmaceutical has a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 14.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 8% over the last 30 days.
Protagonist Therapeutics, Inc. PTGX is a clinical-stage biopharmaceutical company with a proprietary technology platform focused on discovering and developing peptide-based new chemical entities to address significant unmet medical needs.
Protagonist Therapeutics has a Zacks Rank #1. The company has expected earnings growth of 37.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 22.4% over the last 30 days.
Regeneron Pharmaceuticals, Inc. REGN is a biopharmaceutical company focused on the discovery, development and commercialization of treatments targeting serious medical conditions.
Regeneron Pharmaceuticals has expected earnings growth of 14.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 8.9% over the last 60 days. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Horizon Pharma plc HZNP is a biopharmaceutical focused on identifying, developing, acquiring and commercializing products that address unmet therapeutic needs in arthritis, pain, inflammatory and orphan diseases.
Horizon Pharma has a Zacks Rank #2 (Buy). The company has expected earnings growth of 21.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 10.4% over the last 30 days.
Ligand Pharmaceuticals Incorporated LGND is a biotechnology company whose business model is based on developing or acquiring royalty revenue generating assets and coupling them with a lean corporate cost structure.
Ligand Pharmaceuticals has a Zacks Rank #2. The company has expected earnings growth of 28.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 5.7% over the last 30 days.
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Eli Lilly and Company (LLY) : Free Stock Analysis Report
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
Horizon Pharma Public Limited Company (HZNP) : Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
BIOHAVEN PHARM (BHVN) : Free Stock Analysis Report
Protagonist Therapeutics, Inc. (PTGX) : Free Stock Analysis Report
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