Mylan Epipen Controversy Sinks Several Big Pharma Stocks
Gilead Sciences, Inc. (NASDAQ:GILD), Novo Nordisk A/S (ADR) (NYSE:NVO), and Bristol-Myers Squibb Co (NYSE:BMY) each hit 52-week lows last week due to renewed worries over future government regulation concerning drug pricing. Although many drug executives learned their lesson in terms of not raising the price of older-generation drugs after the controversy caused by Martin Shkreli’s Turing Pharmaceuticals, which slapped a fifty-fold price increase on an essential medication last year, Mylan NV (NASDAQ:MYL) executives were somewhat tone-deaf and shamelessly increased the price of EpiPen noticeably this year.
The price increases eventually caused the media to ask why Mylan raised the price of the essential drug by six-fold since 2007. Although Mylan eventually relented and cut the price of EpiPen in half by introducing a generic, drug pricing is now a campaign issue that doesn’t look like it will go away any time soon. Hillary Clinton has promised to do something about unfair drug pricing if elected and Donald Trump has indicated that he will do something similar (Trump has said that he will both control government drug spending and that he will not let people die on the streets). If big pharma cannot raise the price of certain older drugs, it will not be as profitable as previously expected.
85 hedge funds in our database were long Gilead Sciences, Inc. (NASDAQ:GILD) on June 30, while 61 had bullish positions in Bristol-Myers Squibb Co (NYSE:BMY), and 12 owned shares of Novo Nordisk A/S (ADR) (NYSE:NVO).