Market Insider

Trump says drugmakers are 'getting away with murder,' and biotech stocks plunge

Trump: Appreciate moves from Ford, Fiat Chrysler
Trump: Appreciate moves from Ford, Fiat Chrysler

Health care and biotech stocks fell sharply after President-elect Donald Trump attacked the industry during his press conference Wednesday.

"We have to get our drug industry coming back. Our drug industry has been disastrous, they're leaving left and right. They supply our drugs but they don't make them here, to a large extent," Trump said.

"And the other thing we have to do is create new bidding procedures for the drug industry, because they're getting away with murder," he said.

The iShares Nasdaq Biotechnology ETF (IBB) briefly fell more than 2.5 percent, tracking for its first negative day of 2017. The health care SPDR (XLV) declined around .96 percent, with Endo International falling around 8.6 percent, Perrigo down more than 6 percent and Mallinckrodt down more than 7 percent.

The Nasdaq composite erased gains to trade slightly lower. Amgen, Gilead Sciences and Celgene each fell more than 1.7 percent in early afternoon trade.

Health care dropped more than 1.5 percent as the worst performer in the , with the pharmaceuticals sub-sector down more than 1.5 percent and the biotechnology sub-sector off nearly 3 percent.

IBB intraday move Wednesday

Source: FactSet

Market analysts had generally expected a Trump election victory to have less of a negative effect on health care stocks than Democratic candidate Hillary Clinton would have, as she was more outspoken against high drug prices. However, Trump's postelection comments about tackling high prices have hurt the sector. IBB is down more than 5 percent over the last 12 months.

"I expect biotech stocks to rebound, especially as the companies execute on 2017 guidance. However, the drug price issue will likely linger, especially if it becomes one of Trump's key private-sector issues, along with defense, autos, and industrials such as Carrier," Michael Bailey, director of research and chair at FBB Capital Partners, said in an email.

"My sense is cutting drug prices will prove more difficult for Trump than discouraging a company from moving production to Mexico," Bailey said.