The pharmaceutical and biotechnology sub-sectors may benefit under a Republican president and Congress as the industries are less at risk of price controls that Democrats vowed to impose. The iShares U.S. Pharmaceuticals ETF (NYSEArca: IHE) is up 6% year-to-date. IHE tracks the Dow Jones U.S. Select Pharmaceuticals Index and holds 40 stocks with a significant portion of ETF’s lineup devoted to blue-chip pharmaceuticals such as Pfizer (NYSE: PFE) and Merck (NYSE: MRK).
“A challenge for drug makers is that politicians, regulators and consumers are clamoring to curb growth in drug prices. U.S. prescription drug prices rose 5.2% in 2016, the largest increase since 2001, according to the Bureau of Economic Analysis,” according to BlackRock.
Arguably, pharmaceutical stocks have been resilient this year as Trump, on multiple occasions, has used harsh rhetoric regarding prescription drug prices.
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