Investing.com — Healthcare stocks in the U.S. and Europe have fallen since Donald Trump's election victory on Nov. 5, raising concerns about the potential political impact of his cabinet picks, according to Barclays (LON:).
The sector has underperformed broader indices, with the US healthcare ETF lagging around 7%, while European healthcare stocks have lagged the broader European index in approximately 1.5%.
The appointment of Robert F. Kennedy Jr. to lead the Department of Health and Human Services (HHS) has sparked strong reactions, especially in pharmaceutical and biotech stocks.
Kennedy, known for his skepticism about vaccines and his criticism of obesity drugs, has raised concerns about potential regulatory hurdles.
Kennedy's statements against GLP-1 obesity drugs, vaccines, and broader FDA policies have raised alarm bells.
Although analysts at Barclays say these opinions can be difficult to translate into workable policies.
In obesity treatments, Medicare coverage of GLP-1 drugs like Novo Nordisk's (NYSE:) semaglutide is currently limited to patients with documented cardiovascular risks based on SELECT trial criteria. Expanding coverage would require legislative changes under the Treat and Reduce Obesity Act (TROA).
Barclays believes that the commercial market, rather than Medicaid or Medicare, is the main growth driver for anti-obesity drugs.
On vaccine policy, Kennedy's history of vaccine advocacy has amplified skepticism among investors.
Barclays highlights Novo Nordisk and sanafi (NASDAQ:) as stocks that have been “unduly punished” in response to Kennedy's nomination. Barclays has reiterated “overweight” ratings for both companies, calling the sell-off an overreaction.
Although Barclays notes that while the health sector faces short-term challenges, some subsectors may benefit from clearer policies over time.
Beyond Kennedy's nomination, Trump's broader Cabinet appointments, including Vivek Ramaswamy to the Department of Government Efficiency, have heightened investor concerns about regulatory uncertainty.
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