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Trump Health-Care Plans Trouble Industry, Jefferies Survey Finds

  • Almost 80% of respondents expect negative or neutral impact
  • Survey finds 89% believe M&A activity to increase in 2017

Health-care stocks jumped just after Donald Trump’s victory in the U.S. presidential election, yet few in the pharmaceutical industry surveyed by Jefferies Group LLC are celebrating now.

Almost 80 percent of participants who answered questions about the sector’s outlook at the Jefferies Global Healthcare Conference in London last week said that they believe Trump’s positions on health care will be negative, or at best, neutral. Pricing reform was the primary concern.

Nearly nine in 10 people, meanwhile, said they expect an increase in health-care deals next year, driven by biotech transactions. At the top of this year’s list of deals was Teva Pharmaceutical Industries Ltd.’s $40.5 billion purchase of Allergan Plc’s generics unit.

“There’s likely to be quite a bit of M&A next year, and the only thing that is unclear is how big it gets,” GlaxoSmithKline Plc’s Chief Strategy Officer David Redfern said at the conference. “More capital will be spent buying innovation particularly.”

The chief executive officer at Denmark’s Genmab A/S, another one of the conference attendees, said his company was seeking mergers and acquisitions to complement its portfolio of experimental cancer and autoimmune drugs despite being a potential target itself.

“We are looking at the M&A landscape very actively either for the acquisition of products or for the acquisition of technologies, and many times of course when you acquire a key technology or a key product, you’re basically acquiring a whole company,” Jan van de Winkel said in an interview. “But we will do this very carefully.”

Jefferies surveyed some of the 1,428 people attending its annual conference.

— With assistance by Johannes Koch, Naomi Kresge, and Ketaki Gokhale

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