Pharma tops casualty list after Clinton fuels price curb fears
PHARMACEUTICAL companies were among the biggest casualties on the blue chip index after comments from US Democratic presidential candidate Hillary Clinton sparked fresh concerns about curbs on drug prices across the industry.
US firm Mylan found itself at the centre of the storm after senators Susan Collins and Claire McCaskill called for an “urgent briefing” with the group’s chief executive regarding price increases of its severe allergy treatment drug EpiPen. Pharma stocks came under pressure on Wednesday night when Mrs Clinton said that there was “no justification” for the 480pc price hike in the product since 2007. A day later, Mylan said it would reduce the patient cost of the treatment. Nevertheless, investors remained cautious.
Jasper Lawler, of CMC Markets, said Mrs Clinton’s comments “reaffirm a fear in the industry that a Clinton presidency would see a serious crackdown on pharmaceutical price gouging”. In its wake, shares in Hikma tumbled to the bottom of the FTSE 100, down 78p, or 3.5pc, to £21.50. Shire fell 123p to £49.02 and AstraZeneca dropped 69p to £50.11.
On the wider market, investors were on standby mode as they awaited Fed chair Janet Yellen’s speech at Jackson Hole today for any hint on the timing of the next US rate rise. The FTSE
100 tumbled by 18.88 points, or 0.28pc, to 6,816.90.
Irish building materials supplier CRH bucked the trend after it announced its first dividend hike in seven years. It also unveiled halfyear pre-tax profits of €407m, compared with €63m a year ago, thanks to continued momentum in the US and integration of recent acquisitions. Robert Eason, of Goodbody, said: “Management has got the balance sheet into a position that it is likely to be doing more M&A, especially in 2017.” The FTSE 100 stock climbed to the top of the blue chip index, up 71p, or 2.9pc, to £25.40.
Elsewhere global advertising giant WPP continued to benefit from better than expected halfyear results when a slew of brokers hiked its price target, including JP Morgan, Deutsche Bank, Natixis, and Societe Generale. Chris Collett, of Deutsche Bank, said the investment bank found the management presentations “reassuring”.
Separately, a German weekly magazine WirtschaftsWoche named Kantar, a unit of WPP, among three possible suitors interested in the German market research firm GfK. Shares jumped 23p to £18.03.
On the mid-cap index, Entertainment One suffered its sharpest fall since December last year, down 35.7p, or 14.2pc, to 215.1p after ITV withdrew its proposal to buy the Peppa Pig maker.
The British broadcaster said it “has a clear view of the value of the business” but it appears “this value is different to the level at which the board of eOne would currently engage in a formal process”. ITV’s 236p per-share cash offer was rejected two weeks ago.
Online takeaway food company Just Eat also found itself among the midcap laggards on the back of a bearish broker note.
Barclays declared it was “full for now” and lowered the stock’s rating to “equal weight”. Gerardus Vos, of Barclays, said: “While we still see some upside to Just Eat’s conservative guidance as it continues to outmanoeuvre the competition, this is likely to be at a slower pace.” The FTSE 250 stock tumbled 23½p to 545½p. On the other side,
Playtech shares rose 28½p to 928p after it announced a €150m special dividend. The gambling technology company also said it has “a strong pipeline of M&A targets”, posting revenue growth of 11pc in the first half of the year.
In its wake, Canaccord Genuity nudged up its price target from £11 to £11.25 as it views the shares as “the stand-out value play” in the online gaming sector. Luxury retailer Jimmy
Choo put its best foot forward, 6.3p, or 5.3pc, higher at 124p, after it said it enjoyed a strong start to the second half of the year thanks to the post-Brexit pound weakness.
Finally, its peer Burberry dipped 20p to £13.33 after chief executive Christopher Bailey collected £253,500 when he offloaded 18,750 shares at £13.52 a piece. The group’s head of its Asian operations Pascal Perrier also sold 72,162 at a price of £13.66 a share