The Botanix Pharmaceuticals Ltd (ASX: BOT) share price is having a day to forget on Monday.
In afternoon trade, the ASX 300 stock is down 18% to 38.2 cents.
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Why is this ASX 300 stock crashing?
Investors have been selling Botanix and other healthcare shares today amid concerns over US President Donald Trump's plans to cut the price of prescriptions.
According to Reuters, Trump plans to sign an executive order to cut prescription prices to the level paid by other high-income countries. He estimates that this could be a discount of 30% to 80% from current prices.
The US reportedly pays the most in the world for many prescription drugs. In some cases it can be nearly triple that of what people are paying in other developed nations.
Botanix response
Given its big decline, the ASX 300 stock was briefly paused from trade while it prepared a response to the speculation.
The good news is that it feels that it should be safe from any price pressures. Botanix explains:
Sofdra (sofpironium) topical gel, 12.45% is only approved in the USA and is not marketed in any other jurisdiction worldwide by Botanix or any other party. Ecclock gel 5% is a product that contains sofpironium bromide which is marketed in Japan by Botanix's partner, Kaken Pharmaceutical Company, however it is a different concentration and formulation than Sofdra, and was tested in different clinical studies and populations than Sofdra; and neither Ecclock nor any other 5% concentration of sofpironium bromide gel are approved for sale in the USA and Sofdra is also not approved for sale in Japan.
It then concludes:
Based on the limited information currently available in relation to the US Announcement and in light of the above, Botanix does not consider that it is likely that it will be subject to price reductions based on sales of Sofdra outside the USA, as there are none.
This could mean that the ASX 300 stock's fall from grace has been an overreaction today. Though, with Botanix's Sofdra 12.45% topical gel reportedly costing around US$1,043 for a supply of 40.2 millilitres, you can understand why investors are nervous.
All eyes will be on the White House today to see what exactly is contained in Trump's executive order. Stay tuned for that!
Despite today's decline, the Botanix share price is outperforming the benchmark index on a 12-month basis with an improved 38% gain.
