Jim Cramer was prepared for President Donald Trump to go into his meeting with top pharmaceutical executives on Monday with a baseball bat in hand.
Instead, he merely jawboned them about charging less for drugs.
The U.S. government is the biggest buyer of drugs in the world. It has tremendous bargaining power, Cramer said, but chooses not to use it. Instead, it lets the drug companies decide pricing; this in contrary to almost every other country in the world.
It was clear to Cramer that Trump doesn't want to do that, which for the first time seemed at odds with the message he campaigned on.
"This is an important departure for a president who has been sticking to his guns on his campaign promises," the "Mad Money" host said.
Cramer also wondered if Vice President Pence, who was previously the governor of Indiana and a great defender of Indianapolis-based Eli Lilly, could have pointed out the good the industry does. If the government uses its bargaining power to push prices too low, pharmaceutical companies would spend less money developing new drugs.
This time, however, Cramer didn't hear Trump utter the phrase that big pharma is getting away with murder. Instead, he used the "carrot and stick" approach for negotiating and told the companies if they build plants and hire in the U.S., he will support a faster-track FDA to lower the cost of the approval process for new drugs.
Trump may have softened his tone, but he still made it clear he will not tolerate astronomical price increases. Cramer wasn't shocked by this as many executives are already coming to grips with this.
"Even if the president is about to go to war with big pharma, this industry still has too many negatives to get in bed with," Cramer said.
With Trump in office, Cramer has been adamant that the top two industries that should be avoided are pharmaceuticals and retail, and the meeting on Monday didn't make him budge on that stance.
In the past, there have been long periods of time when it didn't make sense to own bank stocks, industrials or oil stocks. This time it's retail and pharma.
"Right now avoiding these two sectors — retail and pharma — seems like a real good idea, unless you have special situations, even if Trump didn't put the wood to big pharma in today's now seemingly regularly scheduled executive pageant," Cramer said.