Shares of U.S. Drugmakers Decline After Kennedy Jr. Appointment

By Samuel Indyk and Ludwig Burger

(Reuters) – Shares of major U.S. drugmakers fell on Friday after President-elect Donald Trump appointed anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services, the top U.S. health agency.

Kennedy has faced criticism for making false medical claims, notably linking vaccines to autism.

He has committed to overhauling the U.S. Food and Drug Administration (FDA), eliminating fluoride from the public water supply, and opposing ultra-processed foods.

As a result, biotechnology and pharmaceutical company shares tumbled, with the S&P 500 Pharmaceuticals index down about 2%. Shares of packaged food and beverage giants like Pepsi and Coca-Cola also declined.

Vaccine manufacturers were particularly affected, declining for the second consecutive day post-announcement. Moderna shares dropped nearly 7%, hitting their lowest level since April 2020, and have fallen about 30% since Trump's election victory on Nov. 5. Pfizer lost 4.5% on Friday, while Novavax, reliant solely on its COVID vaccine, fell nearly 2%.

Jefferies analysts noted that sentiment and perspective significantly impact investors' views regarding FDA and other HHS-related issues, potentially hindering drug acceleration and pro-biotech policies.

Investor Concerns

European pharmaceutical companies also faced pressure as investors gauged the implications of Kennedy's potential role atop the U.S. health sector, which represents the world’s largest drug market.

Shares in BioNtech, Pfizer’s partner on COVID-19 vaccines, plummeted over 10%. U.S.-listed stocks of BioNtech fell almost 4%, while GSK and French drugmaker Sanofi lost 3.9% and 3.3%, respectively. Major biotech lab supplier Sartorius saw a decline of nearly 6% and Bavarian Nordic, a vaccine manufacturer, tumbled 17% following third-quarter results.

Despite these challenges, Bavarian Nordic’s CEO anticipated increased biodefense funding under the Trump administration, even with Kennedy's nomination.

J.P. Morgan analysts highlighted the potential repercussions on agencies within HHS, including the FDA, CDC, NIH, and Medicare/Medicaid, based on Kennedy's stated perspectives regarding the industry. They acknowledged it was premature to determine the full impact.

Alarm from Medical Scientists

Numerous medical scientists expressed concern that crucial vaccination initiatives might be jeopardized.

Kennedy's appointment could have "far-reaching and difficult-to-project implications for the biotechnology sector," noted RBC analyst Brian Abrahams, adding it could introduce a considerable layer of uncertainty and challenge the sector's investability.

Makers of obesity treatments also felt the pressure; Novo Nordisk dropped over 5%, Roche Holding fell more than 2%, and Eli Lilly lost approximately 4%. Kennedy has publicly criticized Novo Nordisk's Ozempic, arguing it addresses obesity symptoms rather than enhancing the food system.

Kennedy proposed removing ultra-processed foods from school lunches to combat diet-related chronic diseases.

U.S. packaged food companies, including Hershey, General Mills, Conagra Brands, and Kraft Heinz, each fell more than 3%. Shares of beverage companies Coca-Cola, PepsiCo, Monster Beverage, and Keurig Dr Pepper similarly dropped around 4%.

Conversely, consumer goods companies such as Procter & Gamble, Colgate-Palmolive, and Church & Dwight rose about 2% on a day when the broader stock market declined.