ASX Health Care Stocks Under Trump: Who’ll Win and Who’ll Lose?

What does the next few years hold for ASX Health Care Stocks Under Trump? There’s no doubt that the health care sector is bearing a greater brunt than any other ASX sector.

Investors are concerned about tariffs on Australian imports, and the potential for the Pharmaceutical Benefits Scheme to be disrupted. The latter makes medicines available at a lower price than they would be in America and Trump is not a fan of this and is at loggerheads with our government. Some investors also worry public confidence in healthcare companies will be hit, with anti-vaxxer Robert Kennedy as healthcare secretary.

We thought we’d write an article to take a deeper look at what investors in healthcare can expect in the next few years. Specifically who’ll win and who’ll lose. Because some initiatives that create losers, may end up creating winners. And it is easy to forget that a deliberately unhealthy America is hardly ‘America First’.

ASX Health Care Stocks Under Trump

Which ASX Health Care Stocks will win?

Well obviously healthcare companies that don’t rely on importing to the US from other countries, particularly those with high tariffs. Companies that deliver services through the cloud like Pro Medicus (ASX:PME) shouldn’t see a disruption to business due to tariffs.

Nor should US-focused healthcare companies like Nova Eye Medical (ASX:EYE). Nova Eye conducts approximately 70% of its business in the U.S. and recently secured FDA clearance for its iTrack Advance device for glaucoma treatment. As a regulated medical device with strong U.S. market adoption, it benefits from the U.S. healthcare system’s high reimbursement standards, which remain intact under OBBB despite broader cuts.

Investors in ResMed (ASX:RMD) should also see good things. The pioneer in sleep apnea treatment does serve 140+ countries is exempt from tariffs – due to the Nairobi protocol which guarantees duty-free treatment for products that help people with disabilities.

Even so is doubling its manufacturing footprint. What’s more is that tariffs will mean ResMed will be immune from cheaper imports and people will pay a premium for ResMed’s solutions which enable diagnosis and treatment to occur in the comfort of their own homes.

Drug makers like Telix (ASX:TLX) and Neuren (ASX:NEU) should continue to reap windfalls from their drugs.

Also look for healthcare companies that are targeting their medicines to be sold into the US national stockpile. Island Pharmaceuticals (ASX:ILA) is one such company and it is planning to do this with Galidesivir for Marburg. Down the track, Galidesivir could also help with measles, a disease for which herd immunity is being lost due to vaccinations falling below 95%.

Which ASX Health Care Stocks will lose?

Any healthcare stocks relying on PBS for a large portion of their revenue. This includes Chemist Warehouse/Sigma (ASX:SIG), Ramsay Healthcare (ASX:RHC) and CSL (ASX:CSL). Even if nothing gives for a while, the bickering between Trump and Australia will keep investors on their toes, worrying what will ultimately happen.

We mentioned Trump hired a vaccine skeptic as health secretary. This may be good for healthcare companies relying on treatments for diseases like measles that may see an uptick amidst lower vaccination rates. But this will be bad news for CSL (ASX:CSL) which has a large portion of its business in vaccines. Its Seqirus sells heavily into the U.S. public and private sectors during the Northern Hemisphere’s flu season, which is coming right up.

And obviously, health care stocks that manufacture outside the US and import there. They will either have to pay tariffs or shift production onshore. FPH is one such company with that dilemma as it has historically made goods in Mexico and Canada. The company has clarified that it only applies to New Zealand-manufactured products and the tariff will be 10%, anticipated to be offset by cost-saving measures. Mexico-made products are exempt under the US-Mexico-Canada Agreement (USMCA).

But one thing many investors are missing is how companies will be impacted by cuts to Medicaid. Small cap HeraMED (ASX:HMD) saw the indignity of its HeraCARE being discontinued by partner Broward Health. Although Broward was satisfied HeraCARE worked, Broward could not continue to fund given Medicaid cuts. The cumulative cut per annum is anticipated to be US$70bn per annum, more than ten times larger than any previous annual cut to the program. And so HeraMED has looked for a US-based commercialisation partner and teamed up with Aspire Health to develop a new market strategy.

Conclusion

ASX health care stocks face an interesting few years ahead with the Trump administration and its unpredictable nature. There’ll be some losers, indeed, and the market has acknowledged that. But the market may be missing the fact that there’ll be winners too…even if the winners aren’t blatantly obvious.

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