If the polls are right, the odds of Hillary Clinton becoming president of the United States are pretty good right now. The conventional wisdom is that many healthcare stocks could suffer under her presidency. While that might be true, healthcare companies like Centene (CNC -2.59%), Express Scripts (ESRX), and Teva Pharmaceutical Industries (TEVA -0.80%) should thrive.
Here's why these three healthcare stocks are among the best to own should Hillary Clinton move back into the White House.
Obamacare is here to stay
If Hillary Clinton wins on Nov. 8, Obamacare isn't going away. That should be good news for Centene. The managed-care company has done quite well since healthcare reform was implemented, with shares more than quadrupling in the last five years.
Although several major health insurers struggled on the Obamacare exchanges, Centene flourished. How did the company find success with so many others failing? Centene's niche is in serving Medicaid patients. The company tailored its plans to appeal to lower-income Americans looking for insurance. It also structured those plans so that they would be profitable.
Obamacare's Medicaid expansion presented Centene its greatest opportunity. Centene has steadily grown its Medicaid membership both organically and through acquisitions.
Centene should be in great position to continue growing in the Medicaid market. And with high-profile exits from several state Obamacare exchanges, the company could also step into new individual health-insurance markets. Considering the growth opportunities that lie ahead, Centene's stock trades at an attractive valuation right now.
They want to cut prescription-drug costs, too
A top healthcare priority for Hillary Clinton is to reduce the costs of prescription drugs. Express Scripts is one company that really likes that idea.
As the nation's largest stand-alone pharmacy benefits manager (PBM), Express Scripts makes more profits if it can more effectively control prescription-drug costs. The company loves competition among generic drugmakers and high generic-prescription fill rates. While filling more generic drugs tends to reduce revenue (since generic-drug prices are lower than branded-drug prices), Express Scripts' profits go up.
Hillary Clinton's campaign promise to "encourage competition to get more generics on the market" likely brings smiles to the faces of Express Scripts executives. If she is successful, they'll probably be successful also.
Express Scripts' stock has fallen 20% in 2016, primarily because of a dispute with its second-largest customer, Anthem. That's good news, though, for investors looking to add the PBM to their portfolios now. Express Scripts should perform well over the long run regardless of the outcome of the November elections, but a Clinton win would very likely be a net positive for the stock.
Bring on the generics and biosimilars
Which company ranks as the No. 1 maker of generic drugs in the world? Teva. One out of every seven generic prescriptions filled in the U.S. are products sold by Teva. But perhaps more important with respect to the upcoming presidential election, Teva is also one of the biggest biosimilar companies in the world.
Hillary Clinton wants to increase the number of biosimilar products available in the U.S. by lowering the exclusivity period for biologics from 12 years to seven years. That would be great for Teva, which markets biosimilars TevaGrastim and Lonquex in Europe. It also markets Granix in the U.S.; while Granix is technically a biosimilar of Neupogen, Teva won U.S. approval for the product as a biologic rather than a biosimilar.
Teva is actively working on several new biosimilars and has made deals to add more to its pipeline. The company bought Allergan's generics business last year, picking up several biosimilar candidates. Teva also recently partnered with Korean biopharmaceutical company Celltrion to gain North American marketing rights for biosimilars of cancer drugs Rituxan and Herceptin.
Like Express Scripts', Teva's stock hasn't done very well in 2016: Shares of the drugmaker have dropped more than 30% year to date. That should be only a temporary setback, though. And if Hillary Clinton gets her way on expanding availability of biosimilars, Teva should be one of the big winners.