By Samuel Indyk and Ludwig Burger

(Reuters) – Shares of major U.S. drugmakers fell on Friday after U.S. President-elect Donald Trump picked Robert F. Kennedy Jr., who has previously spread misinformation on vaccines, to head the Department of Health and Human Services (HHS).

Kennedy has been criticised for making false medical claims, including that vaccines are linked to autism. 

He has also vowed to purge the U.S. Food and Drug Administration, remove fluoride from public water supply, and take a strong stand against ultra-processed food.

Shares across the biotech and pharmaceuticals sector fell, with the broader SPDR S&P Biotech ETF down nearly 4.25% in morning trading.

Shares of packaged food and beverage giants such as Pepsi and Coca-Cola also declined.

Vaccine makers were the worst hit on Friday after declining on Thursday following the announcement. Moderna’s shares fell 7% after hitting their lowest since April 2020 a day earlier. Rival Pfizer shed nearly 4%, while Novavax was 2% lower.

HIT TO SENTIMENT

“The point is around sentiment, stance and perspective – that impacts biotech investors’ view of how FDA and other HHS issues will evolve (ie not accelerating drugs and pro-biotech),” Jefferies analysts said in a note.

European pharma majors also came under pressure as investors assessed the implications of RFK Jr’s potential appointment to the top health job in U.S., the world’s biggest drug market.

German-listed shares of BioNtech, Pfizer’s partner on COVID-19 vaccines, tumbled more than 10%, set for their biggest one-day fall since August. Its U.S.-listed stock fell nearly 5%. GSK shares were down nearly 4%, and French drugmaker Sanofi shed 3.6%.

Sartorius, a major supplier of biotech lab gear and substances, fell 3.8%. Bavarian Nordic, which makes a vaccine for mpox, was down 16%, also hurt by third-quarter results.

The Danish biotech firm’s CEO voiced concerns that RFK Jr, as he is known, could fuel vaccine scepticism but also told Reuters that the U.S. response to the COVID-19 pandemic during Trump’s first term made him confident about future bio-defence funding by the incoming U.S. administration.

FAR-REACHING IMPLICATIONS

“We are not surprised the sector has been under pressure on the potential for RFK Jr. having oversight of the various agencies within HHS (including the FDA, the CDC, NIH, and Medicare/Medicaid) given his previous stated views on the industry,” J.P. Morgan analysts said in a note, adding it was too early to evaluate the exact impact.

Several medical scientists on Friday voiced alarm that vital vaccination efforts could be undermined. 

RFK Jr.’s appointment could have “far-reaching and difficult-to-project implications for the biotechnology sector, adding a considerable layer of uncertainty and challenging investability,” RBC analyst Brian Abrahams said.

Besides vaccine makers, shares of obesity drugmaker Novo Nordisk fell 4.3%, while Roche Holding slipped more than 1.5%. Shares in U.S. drugmaker Eli Lilly also fell 4%.

Kennedy has criticized the popular Novo Nordisk drug Ozempic, which is often prescribed for weight loss, saying it focused on symptoms of the obesity crisis rather than fixing the food system.

He has also called for getting ultra-processed foods out of school lunches as part of a goal to reduce the incidence of diet-related chronic diseases.

U.S. packaged food companies such as Hershey, General Mills, Conagra Brands, and Kraft Heinz were down more than 3%.

Shares of beverage makers Coca-Cola, PepsiCo, Monster Beverage and Keurig Dr Pepper fell between 1% and 4%.

However, shares of consumer goods companies such as Procter & Gamble, Colgate-Palmolive and Church & Dwight, which make toothpastes, rose nearly 1% on a day when the broader markets were down.

(This story has been refiled to add the dropped words ‘Jefferies analysts’ in paragraph 7)

(Reporting by Samuel Indyk in London, Ludwig Burger in Frankfurt, Sriparna Roy and Ananya Mariam Rajesh in Bengaluru; Editing by Alun John, Mark Potter, Louise Heavens and Sriraj Kalluvila)

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