It appears Mr Trump will have the political backing and the will of congress to repeal this piece of legislation. Brewin Dolphin’s head of research, Guy Foster, points out: “Mr Trump has described some features of a replacement and it is not unreasonable. However, repealing Obamacare will have a far-reaching impact and the subject will be significant to congressmen who face re-election in two years’ time.”
Mr Foster also suggests a Trump presidency is not a boon for all healthcare stocks. While pharmaceutical companies responded positively to his victory, he says large healthcare companies may stand to suffer should the new president allow imports of cheaper generics.
On his website, Mr Trump sets out that elected representatives in the House and Senate must “remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products”.
How should healthcare investors be positioned in the face of all this uncertainty? Carl Harald Janson, lead investment manager on the International Biotechnology Trust, says: “The best way for investors to protect themselves is to invest in companies that have the best chance of meeting unmet medical need. That means focusing on areas like cancer, neurological and rare diseases. It’s even more effective to select those companies which not only have truly innovative compounds but are unlikely to face competition.”
Ellie Duncan is deputy features editor at Investment Adviser
