Now’s the Time To Profit From The “Trump Trade”

There is big news in the world of biotech trading.

Yesterday morning President Trump had a “yuge” meeting with Big Pharma and Big Biotech CEOs.

In typical Trump style, he didn’t mince any words. He was a one-man wrecking ball against Big Pharma and its powerful lobby…

Trump wants to force more competition in the pharmaceutical business. Yesterday, Trump said:

“US drug companies have produced extraordinary results for our country but the pricing has been absolutely astronomical for our country.”

He added “we can increase competition and bidding wars, big time.”

…but along with Trump’s stick, come some tasty Trump carrots.

He told the Big Pharma execs that they would get their “products approved or not approved, but either way it’s not going to take 15 years.”  He says the FDA will protect the people but, referring to the red tape in the application process, “instead of 9000 pages it can be 100 pages.”

Trump doesn’t just want cheaper drugs, he wants more new ones. He wants to light a fire under pharmaceutical innovation

It disturbs him when he sees the FDA turn down drugs for terminally ill patients. He wants those drugs approved early by the FDA.

A lot of rules are going to change, and Trump says he opposes anything that makes it harder for young, small companies to hit the market with a life-saving new drug.

What am I expecting to come out of this?

Look for Trump to push on allowing bids and price negotiations for Medicare and Medicaid drugs as part of his effort to control high drug prices.

Furthermore, look for him to kick start the FDA so that it will process a backlog of some 4000 generic competitors to existing drugs. Many of these generics have had applications sitting for years.

It’s free market 101. Increase competition and you drive down costs while improving quality.

But we are going to also see major regulatory overhaul also.

At the time of this writing, I don’t yet know who will be the FDA’s new chief…but I can safely say it will be someone who shares Trump’s concerns for easing approval of new drugs…especially those in patients who will die under existing standards of care.

Trump is going to throw these sick patients a life preserver, and that will be great for terminally ill patients.

And it is also going to be huge for small, development stage biotech companies.

In which kinds of diseases might Trump favor easing restrictions?

We know the President’s son, Eric Trump, has worked to raise millions of dollars for children with cancer. The Donald himself donates to the American Cancer Society.

His daughter Ivanka has helped support people with AIDS and HIV, as well as supporting United Cerebral Palsy.

To the list of Trump’s health-related charitable giving we can add Alliance for Lupus Research, Autism Speaks, Children with AIDS, Crohn’s & Colitis Foundation, Muhammad Ali Parkinson Center, Pediatric Epilepsy Project, as well as others.

If a small company is in early trials but also good data in one of these diseases, I can imagine a Trump FDA jumping on accelerating its availability.

And if a recalcitrant FDA refuses to allow early use of such a drug in patients—particularly terminally ill children—it will end up on the wrong end of one of Trump’s infamous Twitter tirades.

The power of his bully pulpit alone could make him the greatest patient advocate of all time.

For biotechs, that could mean faster profits than ever before.

It’s a long-needed change in how we regulate new therapies.

And that’s going to be great for young, small, innovative biotech companies in the early stages of bringing breakthrough therapies in life threatening diseases to the market.

I hope you have biotech in your portfolio. Because now’s the time to profit from the “Trump Trade.”

To a bright future,

Ray Blanco

The Daily Reckoning