On November 6, Trump scored twice and won the new US presidential election. The White House once again welcomed this Republican familiar.

For a long time, the Republican Party has been more conservative and "cold" towards the biopharmaceutical industry than the Democratic Party. Trump is no exception: the Republican Party takes the "small government" route, and he has long focused his position on opposing government intervention. For pharmaceutical companies, this is a good thing: a relatively loose policy environment is more conducive to the free development of the industry.

A pharmaceutical practitioner in the United States explained the industry sentiment in this way: "Generally speaking, Pharma believes that Trump may revise the previous radical IRA (Inflation Reduction Act) and re-emphasize market logic; some biotechs are on the sidelines; the worst may be some public research institutions and public health institutions. According to Trump's previous attitude, their funding will be much less and they will face troubles such as optimization."

The IRA mentioned above, which involves the "US health insurance negotiations", may be the biggest change experienced by the US biopharmaceutical industry in recent years.

This year, PhRMA, the most influential industry association in the United States, filed a lawsuit against the bill, protesting the legitimacy of government intervention in pricing. Other large pharmaceutical companies such as Novo Nordisk, Johnson & Johnson, Bristol-Myers Squibb, and AstraZeneca are also engaged in legal battles.

However, under Biden, these protests were eventually rejected one by one. Trump's victory gave them hope - although he has not yet stated his position, at least many influential Republican lawmakers are opposed and seek to repeal it, and Trump is likely to lower the priority of the bill. Stephen Ubl, CEO of PhRMA, sent a congratulatory message as soon as possible after the election, pointing out that PhRMA "looks forward to working with Trump to build on the success of his first administration."

In addition, the industry has also seen an opportunity to turn around on the issue of mergers and acquisitions. During Biden's tenure, antitrust agencies led by Democrat Lina Khan have been actively reviewing some large pharmaceutical companies' mergers and acquisitions of small biotech and biopharma. Not only large transactions: In December last year, the merger and acquisition guidelines were revised to facilitate the review of smaller merger and acquisition cases. In March this year, the antitrust agency also announced a federal investigation into the behavior of private equity in the medical industry to prevent capital from raising prices and neutralizing competitors through mergers and acquisitions.

Republicans have always been opposed to Lina Khan and her team. Trump supporter Elon Musk once said that Lina Khan would be "fired soon" in the next administration. This change has released a positive signal for large pharmaceutical companies, biotech, and investment institutions that the resistance to mergers and acquisitions will be reduced in the future.

But at the same time, both the Democratic Party and the Republican Party also recognize the seriousness of the US's annual medical expenditure of $4.5 trillion. However, the two seek different solutions: the Democratic Party during Biden's term advocates giving up corporate interests and lowering drug prices; while the Republican Party is mainly committed to making more detailed and restrictive insurance coverage, as well as solving corruption and efficiency problems in institutions.

Before a real alternative to IRA is found, the impact of "health care negotiations" may be weakened, but it will not disappear immediately. As predicted by PwC: Although Trump's team has emphasized deregulation in the biomedical field throughout the election, actual policies may deviate more from traditional Republican approaches than in the past few years.

01
Why doesn't Trump dare to promise health care reform?

During the 2024 presidential campaign, Trump and his team hardly proposed any health-related policy plans.

During the 2016 presidential campaign, Trump repeatedly promised that if elected, he would take measures to allow the government to negotiate drug prices. But this promise was not fulfilled in the end.

During Trump's first term, he proposed a "most favored nation treatment" policy, which requires Medicare to price the same drug based on the lowest price paid by other developed countries for a specific drug. This is also seen as the main solution to the high drug prices during his term.

The plan was originally scheduled to start in January 2021 for a period of 7 years. However, after lawsuits from several pharmaceutical companies and industry groups, a federal judge suspended the plan in December 2020. After Biden took office, the plan was officially canceled in 2022.

The main reason why this policy has not been implemented is that many manufacturers will not sell products at the most-favored-nation price. Without the government's initiative to negotiate with drug dealers, the biggest possibility is that many cutting-edge drugs cannot be supplied, resulting in a decline in treatment quality. Coupled with the epidemic, it will make things worse for patients who can't use medicine.

"This policy itself is problematic, and even the Republican Party has a lot of opinions about it. Drug pricing in different countries is based on actual clinical needs. For example, the incidence of some diseases in certain places is particularly high, so the local government will focus on adjusting prices, which is a rational decision based on science. The most important thing is that places like the United Kingdom and Canada have price negotiation practices, so they can't be directly misappropriated." The above-mentioned practitioner said.

In his opinion, the possibility of restarting the plan in the new term is not very high. Although there is no impact from the epidemic, any new policy on drug pricing is unlikely to be put on the agenda before dealing with the "mountain" of IRA.

Therefore, from a certain perspective, Trump and his team are in a very embarrassing sandwich zone on medical issues. This may explain why he did not put forward many visions or promises on related issues in this election like he did last time.

At present, the industry generally believes that the possibility of IRA being abolished during Trump's term is extremely low. The key is whether the specific implementation methods and execution nodes will change. Like the "Obama Care Reform", although Trump criticized it to the utmost, he could only "patch" it because he could not come up with a better alternative.

"It is also possible that Trump will compensate pharma in other ways. For example, lower tax rates, such as reducing the intensity of antitrust, opening up mergers and acquisitions, etc. Judging from his performance in his previous term, he is not a particularly good reformer, so he should still do some routine operations."

02
Who will he support?

"What kind of impact Trump will have on the industry depends mainly on subsequent appointments, especially whether the heads of FDA and NIH will be replaced. The Republican Party is a small government and does less in terms of supervision. Let the market test it after a quick replacement. This is the general idea." Another practitioner in the United States said.

Just a few days ago, the first name appeared on Trump's big list.

Last Thursday, Trump announced the appointment of Robert Kennedy Jr. as his Secretary of Health and Human Services. This little Kennedy is the nephew of President Kennedy. For many years, he has been one of the most famous anti-vaccine conspiracy theorists in the United States, often spreading doubts about the safety and effectiveness of vaccines. As the top public health official, he will be involved in the revision and implementation of a series of important policies such as the Affordable Care Act and IRA.

Before the appointment was announced, Kennedy Jr. revealed to the media that Trump gave him three "instructions", the first is to eliminate corruption and conflicts in regulatory agencies, the second is to return the industry to the "gold standard", and the third is to end the "epidemic of chronic diseases". The last point is the concept that Kennedy Jr. has been promoting in recent years, that is, he believes that the main health problems of the American people at present are all caused by environmental pollution and food poisoning.

Therefore, the most likely work he will do after taking office includes removing fluoride from tap water or introducing raw milk to campuses. He is also a supporter of stem cell therapy and hyperbaric oxygen therapy, and believes that this "thing that promotes human health and cannot be patented by pharmaceutical companies" has long been suppressed in the health system.

This seemingly "concern" about health issues has caused concern among many professionals in the industry. Because Kennedy's attribution and the solutions he proposed are too simple and not based on strong scientific evidence.

In past interviews, Kennedy said he wanted to conduct the same rigorous randomized clinical trials for vaccines as those used to test drugs, and required mandatory reporting of side effects and complications and tracking of long-term effects. But scientists believe that such advocacy of the dangers of vaccines will reduce people's willingness and vaccination rates.

After the appointment was announced, the stock prices of various vaccine manufacturers fell to varying degrees that day: Moderna 5%, Novavax 7%, BioNTech 6%.

At the same time, Kennedy was also full of resentment towards the FDA as a functional department, and threatened to implement a thorough "cleansing". At a rally in Arizona this month, he also expressed his plan to fire 600 NIH employees immediately after Trump entered the White House. The reason is that he believes that all of the above public health agencies have interests linked to large pharmaceutical companies, which has harmed the health security of the United States.

The aforementioned practitioners believe that although Trump's appointment is "crazy", it is unlikely to have much impact on the industry because the rectification of public health institutions is subject to legal protection. "But this also sends a signal that this government will not spend too much effort on medical issues. After all, personnel appointments are so casual, and there is a sense of entertaining the whole nation."

And on the 19th, Trump announced that he would appoint American heart surgeon Mehmet Oz to be in charge of the Centers for Medicare and Medicaid Services (CMS). Oz is an American TV celebrity who has hosted the health and wellness program "The Dr. Oz Show". But his scientific ideas are often criticized for having no scientific evidence. For example, during the epidemic, he advocated the use of hydroxychloroquine and other unproven treatments.

In the statement, Trump said that Oz will "work closely with Robert Kennedy Jr. to challenge the medical industrial complex and the various chronic diseases it brings. The CMS that Oz will be in charge of is responsible for several of the largest health-related government projects in the United States, providing health insurance for more than 150 million Americans, and is responsible for setting guidelines for the fees charged by doctors, hospitals and pharmaceutical companies. In the past, leaders of this department usually have experience in insurance policy-related work, which is exactly what Oz lacks.

03
Impact on China's biopharmaceutical industry

In addition to IRA, the entire industry is also concerned about where the Biosafety Act drafted during Biden's term will go.

Trump has always been keen to eliminate the legacy of his predecessor, but he does not have much reason to oppose the Biosafety Act. Judging from his current statement, industrial sanctions against China may be expanded. Situation: Trump proposed a 10%-20% tariff on imported goods during the election, but tariffs on imports from China will be set at 60% or higher.

China is the world's largest supplier of active pharmaceutical ingredients (API), accounting for more than 40% of US API imports. During Trump's last term, raw material costs increased by 20-25% across the biopharmaceutical supply chain due to tariff increases. Ultimately, rising costs pushed up the prices of essential drugs in the United States, including generic drugs and biosimilars. According to a 2020 report by the US International Trade Commission, the prices of commonly used antibiotics and oncology drugs soared by 15-30% that year.

Not only the supply chain, but also the fierce trade war during Trump's last term has affected the field of innovative drugs. Restrictions on technology transfer have led to a sharp decline in joint ventures and cross-border R&D programs. ChinaBio According to data from the Group, Sino-US biopharmaceutical cooperation fell by 30% between 2018 and 2020.

However, when it comes to the pharmaceutical industry, Trump, who is re-elected as president, will face a contradiction: because of the issue of medical insurance cost control, drug prices cannot be too high; in addition, he wants the pharmaceutical industry to return to the "gold standard", and the cost control and profit realization of the pharmaceutical industry are inseparable from the participation of "high-quality and low-cost" Chinese CROs.

"On the one hand, Trump wants to lower drug prices, but on the other hand, he is artificially raising manufacturing costs. Although there is industrial repatriation and India's substitution, it is still difficult to exclude China all at once."

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