US election boosts drug stocks as pricing fears recede

Pharmaceutical stocks surged in Europe on Wednesday as Republican Donald Trump's US presidential election win led investors to conclude the threat of tough action on drug pricing had receded.

News that a California ballot initiative aimed at reining in rising prices for prescription drugs was headed for defeat also buoyed the mood, with shares in major European drugmakers rising between 2 percent and more than 6 percent in early trade.

Trump's victory over Hillary Clinton, whose drug pricing criticisms have weighed on shares for more than a year, is not without risk, however. A Republican pledge to repeal Obamacare could have potentially chaotic consequences.

Healthcare was the biggest sector gainer in Europe following Trump's win, with the Stoxx 600 healthcare index .SXDP up 2.5 percent by 0905 GMT.

Danish insulin maker Novo Nordisk, whose diabetes drug prices have been under fire recently in the United States, saw the largest gains, rising 6.5 percent. Novo generates more than half its sales in the profitable U.S. marketplace.

Other major drugmakers like Roche, Novartis, Sanofi, AstraZeneca and GlaxoSmithKline rose between 2 and 3.5 percent.

Throughout the campaign Clinton had been much more critical of drug industry pricing than Trump, famously sending drug stocks into a tailspin in September 2015 when she tweeted about specialty drug "price gouging".

Trump has said less on the topic but he has suggested support for importation of cheaper drugs, as well as advocating increased scrutiny over drug price increases and a bigger role for negotiating down the cost of medicines.

Marie Owens-Thomsen, chief economist at Indosuez Wealth Management, believes the idea that he is the good news candidate for the pharmaceuticals industry is "a bit of a simplistic view".