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Health & Biotech
With Donald Trump selecting an anti-vaxxing, anti-fluoridation exponent of unsubstantiated therapies such as raw milk as his head health czar, what on earth could go wrong?
Last week’s appointment of Robert F Kennedy Junior as secretary of the US Department of Health and Human Services is extraordinary – and not because he reportedly has been “associated” with dumping a dead bear cub in Central Park and decapitating a dead whale with a chainsaw.
The more pertinent concern is that he is girding for war with the public departments he oversees, including the US Food & Drug Administration (FDA).
As with Trump, he’s not exactly a friend of Big Pharma.
“For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation and disinformation when it comes to public health,” Trump said on the former independent and famed Democrat’s appointment.
RFK Jr’s other stated priorities are tackling obesity, diabetes, autism and mental illnesses – which seem wholesome enough.
For the dozens of ASX-listed biotech and healthcare stocks active in the US, it sounds like the recipe for mayhem.
In reality, the implications of Trumpcare ‘making Americans healthy again’ are likely to be far more nuanced.
Why? Well, firstly, wholesale changes are hard to implement without co-operative bureaucrats – or what’s left of them – and senior Republicans, not all of whom have sipped the Trump Kool-Aid (or RFK Jr’s hydroxychloroquine smoothies).
Some reforms may be beneficial, and we’ve already mentioned the likely liberalisation of the ground rules for testing psychedelics to treat conditions such as post-traumatic stress disorder and depression.
Stocks including Emyria (ASX:EMD), Tryptamine Therapeutics (ASX:TYP) and Bioxyne (ASX:BXN) have already had a classic speculative ‘Trump Trade’ run, on the prospect of the FDA shedding its sceptical stance on these substances.
Trump’s promised tax cuts are a visceral benefit to profitable Aussie biotechs – no, it’s not an oxymoronic term – who pay tax to Uncle Sam.
In a report, UBS ranks PolyNovo (ASX:PNV) CSL CSL (ASX:CSL) and Ansell (ASX:ANN) in its top 20 beneficiaries in terms of US-active ASX plays generally, with earnings per share benefits of 4.2%, 3.5% and 3.35% respectively in 2026.
This assumes the corporate rate is cut from 21% to 15% as expected.
Our fourth biggest healthcare company with a US presence, the patriotic ProMedicus (ASX:PME) doesn’t rate because it pays most of its tax here (where its intellectual property resides).
Increased tariffs also bode well for glovemaker Ansell, if only because they make life harder for its Chinese rivals. But the glove is on the other hand for companies such as CSL, Telix Pharmaceuticals (ASX:TLX), Cochlear (ASX:COH) and ResMed (ASX:RMD), which may need to rejig where they source their raw materials.
Many companies will be not just interpreting RFK Jr’s intentions from his often-outlandish statements, but will be keenly waiting to see whether the DOGE has bark.
The DOGE is the Department of Government Efficiency, a new bureaucracy created to shrink the level of … bureaucracy.
DOGE is to be headed not just by Elon Musk, but by pharma entrepreneur-turned-Republican presidential candidate, Vivek Ramaswamy, who has first-hand experience of the ponderous US health system.
Ramaswamy already has targeted the FDA, where he alleges too much bureaucracy is leading to less innovation and higher costs.
The chief operating officer of heart valve disease diagnosis developer Echo IQ (ASX:EIQ), Deon Strydom, says ‘bring it on’.
“RFK has spoken about removing the red tape that stops innovation in healthcare,” he says.
“There’s a lot of red tape for healthcare in the US, so if they can do anything to remove it that will help us a lot.”
Interestingly, the Trump administration may well be inspired by Australia’s health system.
In a fireside chat with then Prime Minister Malcolm Turnbull in 2017, Trump readily conceded that Australia’s health was superior to that of the US.
Democrat stalwart Bernie Sanders concurred, rolling out a damning list of comparisons including the average cost of an overnight hospital stay (US$1300 here, US$4300 in the US).
Australian patients stuck on a hospital gurney for four hours might disagree, but at least they emerge with their wallets intact.
As for migrant policy, CSL pays US donors for blood plasma donations, between 5-9% of which are day-tripping Mexicans to the company’s southern US collection centres.
Severe border restrictions – as promised – could staunch this Mexican wave of donors.
However, CSL encountered the problem during the Trump Mark One presidency and US-wide collections were then compounded by Covid.
“The topic of the US-Mexico border has also come up less than in 2020’s election, but we think the collective memory has not forgotten the impact [of Covid],” UBS says.
“We think the risk that this becomes a serious issue for the stock is relatively low, though.”
The company argues that pandemic gods willing – it will only face the one problem this time around, with more efficient collection methods compensating for any Mexican stand-off.
UBS also notes that about 5% of CSL’s sales are to China, mainly albumin from US donors and it remains to be seen whether likely retaliatory tariffs would extend to such life-saving items.
As with other global vaccine makers, CSL shares have been affected by the loose talk about vaccine regulatory settings which may delay development.
On the flipside, hearing device maker Cochlear is viewed as potential winner if Moderna is stymied from developing its vaccine for cytomegalovirus, which causes childhood deafness.
On Trump’s rhetoric, drug companies will be under pressure to reduce the price of therapies, which may staunch the development of expensive new ones.
But what political party ever has campaigned on a mantra of denying life-saving cancer therapies to kids? UBS believes that if anything, drug pricing pressure is more acute under a Democrat administration.
In 2020 Trump vaunted referencing US drug prices to (cheaper) overseas jurisdictions – an idea that went nowhere.
For the swelling legion of ASX biotechs doing business in the US, it’s a waiting game to see which of Trump’s radical policies go nowhere, or somewhere.
As per the usual script, investors have been taking stabs at the likely winners and losers, based on little – or no – real information.
In the meantime, it’s a case of ‘business as usual’ for the ASX biotech champs with a foothold in the world’s most important health market.
At Stockhead, we tell it as it is. While Tryptamine Therapeutics is a Stockhead advertiser, it did not sponsor this article
Health & Biotech
Health & Biotech
Health & Biotech
