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Drug Companies Under Fire

1/12/2017
By Charles Payne, CEO & Principal Analyst

We've got to get our drug industry back. Our drug industry has been disastrous. They're leaving left and right. They supply our drugs, but they don't make them here, to a large extent. And the other thing we have to do is create new bidding procedures for the drug industry because they're getting away with murder.  Pharma, pharma has a lot of lobbies and a lot of lobbyists and a lot of power and there's very little bidding on drugs. We're the largest buyer of drugs in the world and yet we don't bid properly and we're going to start bidding and we're going to save billions of dollars over a period of time.

-Donald J. Trump

I have been to drug manufacturing facilities, and it’s mostly mashing powder into pills. It’s not rocket science, so it is surprising how much of the U.S. drug company production is done outside the United States. Those imports added up to $86 billion in 2015, or 25% of the total market.  In this case, production isn’t about cheap labor but steep taxes. Check out the top five sources of imports:

1.

Ireland

$15.2 billion

2.

Germany

$14.5 billion

3.

Switzerland

$9.4 billion

4.

Israel

$6.0 billion

5.

India

$6.0 billion

 

Wall Street knows the majority of Republicans in Congress have been against Medicare-negotiated drug prices, and Tom Price even voted against such a policy. With that being said, I suspect drug companies will play ball to a degree to avoid public shaming, to getting the administration to allow merger activities, and to make the FDA drug approval process less onerous and expensive.  

I bet a deal is being worked out.

Charles Payne
Wall Street Strategies


 

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