5 Healthcare Stocks To Buy Despite A Clinton Victory

As the race for the presidency enters its last lap, Hillary Clinton has emerged as the clear favorite. Going by the Real Clear Politics poll average, Clinton is leading Donald Trump by more than six points as of now. Market watchers and analysts alike are now examining the implications of a Clinton presidency for various sectors of the economy.

Given her stand on health care and the biotech industry, in particular, it comes as no surprise that investors have become increasingly wary of such stocks. However, the sector’s inherent appeal remains intact despite the troubled waters it has traversed recently. Picking healthcare stocks despite a Clinton win could be a profitable play after all.

Would Healthcare Companies Be Badly Hit?

Most of the pharma industry’s apprehensions related to a Clinton presidency are related to her stated position on drug overpricing. However, the fear that a Clinton presidency would lead to industry-wide price controls on drugs may be widely exaggerated, according to analysts at Credit Suisse (CS – Snapshot Report) .

Clinton and Donald Trump are both in favor of giving Medicare the freedom to negotiate with drugmakers directly on prices of prescription drugs. But such a scenario is highly unlikely given the resistance that President Obama has faced in his multiple attempts at giving Medicare bargaining power. Meanwhile, the pharma industry supports a different approach to fix to price. This model envisages prices being set according to a drug’s performance.

For instance, a drug could be initially provided at lower cost and prescription plans would later pay higher amounts if the medication succeeds in achieving preset goals. Several companies such as Eli Lily (LLY – Analyst Report) , Merck (MRK – Analyst Report) and Amgen (AMGN – Analyst Report) have already struck such deals where performance determines pricing.

Sector Prospects Remain Bright

Given the challenges on the drug pricing front, investors are now betting on other stock categories which could be better bets. Medical technology, life science tools, and service providers have replaced biotech stocks as industry favorites.