By Samuel Indyk and Ludwig Burger

(Reuters) – Shares of major U.S. drugmakers fell on Friday after President-elect Donald Trump picked anti-vaccine activist Robert F. Kennedy Jr. to head the Department of Health and Human Services, the top U.S. health agency.

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

Kennedy 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 of biotechnology and pharmaceutical companies fell, with the S&P 500 Pharmaceuticals index down about 2%. Shares of packaged food and beverage giants such as Pepsi and Coca-Cola also declined.

Vaccine makers were the worst hit on Friday, declining for a second day following the announcement of Kennedy’s appointment. Moderna shares fell almost 7% after hitting their lowest level since April 2020. Shares of Moderna, which makes vaccines for COVID-19 and for respiratory syncytial virus, have tumbled about 30% since Trump’s election victory on Nov. 5. Rival Pfizer shed 4.5% on Friday, while Novavax, whose only product is a COVID vaccine, lost almost 2%.

“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.

‘FAR-REACHING IMPLICATIONS’

European pharma majors also came under pressure as investors assessed the implications of Kennedy’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%. Its U.S.-listed stock fell almost 4%. GSK shares fell 3.9% and French drugmaker Sanofi shed 3.3%.

Sartorius, a major supplier of biotech lab gear and substances, fell almost 6%. Bavarian Nordic, which makes a vaccine for mpox, tumbled 17%, also hurt by third-quarter results.

Bavarian Nordic’s CEO said he expects the Trump administration to boost biodefense funding despite the nomination of Kennedy.

J.P. Morgan analysts cited the potential impact on agencies that are part of HHS, including the Centers for Disease Control and Prevention, the National Institutes of Health, and Medicare and Medicaid, as well as the FDA.

“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,” the J.P. Morgan analysts wrote in a note, adding that it was too early to evaluate the exact impact.

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

Kennedy’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.

Makers of obesity drugs were also pressured, with Novo Nordisk dropping more than 5%, Roche Holding down more than 2%, and Eli Lilly losing about 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 improving the food system.

Kennedy has called for removing ultra-processed foods from 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% each.

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

However, shares of consumer goods companies Procter & Gamble, Colgate-Palmolive and Church & Dwight, which make toothpastes, among other products, rose about 2% on a day when the broader stock market was down.

(Reporting by Samuel Indyk in London, Ludwig Burger in Frankfurt, Sriparna Roy and Ananya Mariam Rajesh in Bengaluru; additional reporting by Noel Randewich in Oakland, California; Editing by Alun John, Mark Potter, Louise Heavens, Sriraj Kalluvila and Leslie Adler)

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