Biotech Stocks Plunge As Trump Vows To Lower Drug Prices

president trump photo

The iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB) was on the decline this morning, after Donald Trump’s TIME Person of the Year profile revealed that the president-elect likely won’t be the bullish force for drug companies many thought he’d be.

Trump told TIME that he actually plans to lower drug prices, which is in direct opposition to the general notion that he’d favor a hands-off approach:

The value of biotechnology stocks, for example, which enjoy large profit margins under current law, rose 9% in the day after Trump’s election, a rally of relief that the price controls Clinton had proposed would not happen. But Trump says his goal has not wavered. “I’m going to bring down drug prices,” he says. “I don’t like what has happened with drug prices.”

This commentary probably comes as a shock to many investors and analysts, but the market was starting to price the news in already. The post-election biotech rally seemed to fade quickly, and the stock tape is often very predictive to these kinds of news events.

Trump has talked a big game during his campaign, and it remains to be seen how well he’ll follow through on his numerous promises. But it’s probably safe to say that the new president won’t be the boon that biotech investors were looking for.

IBB shares fell $4.61 (-1.68%) to $269.73 per share in premarket trading Wednesday. Year-to-date, IBB has fallen 18.91%, versus an 8.75% rise in the benchmark S&P 500 index during the same period.