Shares in US-focused pharmaceutical drugs retailer Mayne Pharma Group Ltd (ASX: MYX) have been on a wild ride recently and not just because it has been on a giant acquisition spree.
In June the company announced that it would spend US$652 million on a portfolio of 42 different potential drug products after agreeing separate deals with US pharmaceutical giants Teva and Allergan.
The newly-acquired portfolio is expected by the company to contribute US$237 million in sales in FY17 on margins greater than 50%, with the acquisitions deepening Mayne Pharma's leverage to the political hot potato of drug pricing in the world's largest healthcare market of North America.
Just a few months ago the company was subpoenaed to provide information to the US Department of Justice over the marketing, pricing and sales of selected generic products. In November the group updated the market that it did not expect the investigation to have a "material impact" on future earnings, although it added an important disclaimer in stating "no assurance can be given as to the timing or outcome of the investigation".
However, there may now be a far bigger problem for Mayne Pharma on the horizon after President-elect of the U.S. Donald Trump reportedly vowed to "bring down" drug prices during an interview with Time Magazine.
Given the President-elect has the majorities in congress to drive through legislation it's no surprise US pharmaceutical companies saw their shares dumped by investors on the news. Mayne Pharma shares are up 7% today, after being sold off earlier in the week and investors can expect a bumpy ride thanks to the fast-changing political environment in North America.
Others in the firing line include over potential reforms to the US regulatory environment include CSL Limited (ASX: CSL) and Cochlear Ltd (ASX: COH). Although both these businesses retain attractive long-term outlooks thanks to the market-leading nature and complexity of the products they sell.
