Healthcare - Overall: At a political crossroads into US election

About the author:

Dr Derek Jellinek
Author name:
By Dr Derek Jellinek
Job title:
Senior Analyst
Date posted:
29 October 2020, 10:36 AM
Sectors Covered:
Healthcare

  • Investor anxieties tend to run high in any election year, let alone one as contentious as the current battle for the White House by President Trump and former Vice President Joe Biden amid broad economic damage from the ongoing coronavirus pandemic.
  • We do not expect sweeping reforms, regardless of who occupies the White House, with COVID-19 remaining front and centre, but expect the sector will take its lead from the composition of the new Congress, which should be watched closely.
  • In this note, we assess the impact across key healthcare segments, highlighting ASX and international listed companies as well as ETFs which allow exposure to these themes.
  • Irrespective of how the future of US healthcare unfolds, investors should focus on companies where innovation drives medical products and services across geographically diverse businesses, such as CSL, COH, RMD, and SHL.

Not expecting sweeping reforms

Looking at proposed US healthcare policies, the candidates differ on almost everything. However, as rhetoric on healthcare policy changes tend to exceed the reality of what can be accomplished, we do not expect broad, sweeping new term reforms, regardless of who occupies the White House. And as COVID-19 is likely to remain front and centre, the ‘can’ for any major regulatory change is effectively kicked down the road

Composition of Congress key to watch

However, one area where the candidates tend to agree is on lowering drug prices to make healthcare more affordable. Obviously, the potential for drug pricing reform could be a source of volatility and headline risk for pharmaceutical/biotechnology stocks. That said, healthcare policies are often seen as a trade-off between providing affordable healthcare to consumers on one hand, and supporting healthcare industries on the other. Thus, we believe the composition of the new Congress is key to watch, as a unified government may increase the chances of pushing through more aggressive policies, while a split Congress may result in a stalemate, which generally favours healthcare companies. 

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Morgans clients can access further analysis on the healthcare sector in the full report: "Healthcare - Overall At a political crossroads into US election?"

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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