Trump for the win

: the impact on the pharmaceutical industry : an event study approach

Abstract

How did the pharmaceutical industry react to Donald Trump’s election? Which were the main drivers propelling this reaction? This dissertation investigates the impact on 95 Pharmaceutical and Biotechnology companies listed in the U.S market. We found significant evidence of a positive reaction that ranged from 6.8% to 10.3% in abnormal returns during the first two trading days after the election verdict. This reaction translated into a financial effect worth $115 billion to $140 billion in market capitalization. Although this industry reacts to news related to the Obamacare repeal, we found evidences of two other main drivers explaining its short-term post-election performance. On one hand, the belief that Hillary Clinton would win the election. As all odds pointed in the direction of a Hillary win, the market was already incorporating this information on stock prices prior the election. On the other hand, the lack of details given by Donald Trump in regards to the pricing of pharmaceutical drugs. Prior the elections Trump seemed to be advocate of a more free-market approach in contrary of his opponent that had a strong critical opinion and aimed to control the pricing of pharmaceutical drugs.

Date of Award	19 Jul 2017
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Geraldo Cerqueiro (Supervisor)