Time magazine's Person of the Year, President-elect Donald Trump, just dropped a bomb on biotech and pharmaceutical industry CEO's and investors. During an interview with Time, Trump suggested that it's a bad bet to bank on him as being friendly to drug companies -- at least in terms of drug prices.

"I'm going to bring down drug prices... I don't like what has happened with drug prices," Trump said.

Image source: donaldjtrump.com.

Trump's 16 words caused an industrywide sell off in biopharma stocks, and it prompted a flurry of tweets from industry watchers and participants, including Allergan plc (NYSE:AGN) CEO Brent Saunders, who advocates for proactively capping drug price increases.

Under Saunders' leadership, Allergan has pioneered the concept of proactively putting a lid on drug price increases as a way to restore the industry's reputation and sidestep the risk of price regulation.

Allergan's social contract with patients commits to investing "billions of dollars" in research and development, while limiting price increases on brand-name medicines to "no more than once per year and... to single-digit percentage increases."

Since releasing Allergan's social contract, Saunders has actively tweeted about the importance of driving growth through innovation, not price hikes. He's even applauded competitors that pledge to hold the line on pricing, recently offering kudos to Novo Nordisk (NYSE:NVO) for capping future price increases.

On Wednesday, Saunder's took to Twitter again to remind peers to join Allergan and Novo Nordisk in committing to rein in runaway drug prices. If they don't self-regulate, he argues, they run the risk of being singled out by Trump.

Source: Allergan CEO Brent Saunders via Twitter.

Saunders' message is a reminder to industry leaders and investors that Trump is more than willing to publicly battle companies to get his way.

Recently, Trump's tweets profit-shamed United Technologies' Carrier air conditioner business into keeping jobs in Indiana, rather than shipping them to Mexico. Trump also put Boeing into his Twitter cross-hairs, threatening to cancel contracts with the plane maker if it doesn't rein in the cost of the next generation Air Force One.

Given the industrywide sell-off that Trump's broad-brushstroke comments caused in biopharma Wednesday, one can only imagine what kind of company-specific damage his tweets could inflict.

At mid-day, the NASDAQ Biotechnology index ETF (NASDAQ:IBB) was down 3.75%. Among the hardest hit stocks in the index ETF were those of cancer companies, such as Celgene.

Celgene's shares fell more than 5% in the first few hours of trading Wednesday, ostensibly because the company's top selling Revlimid, which represents 64% of its nearly $3 billion in quarterly sales, boasts a six figure price tag.

Less hard-hit were Allergan and Novo Nordisk, both of which saw share price declines of less than 1%.

Looking forward

It's anyone's guess how drug price scrutiny will play out in Washington, D.C., but if the industry doesn't take action to restore its credibility with payers and patients, it could face a profit-unfriendly day of reckoning. Savvy leaders like Saunders seem to understand this, but that doesn't mean everyone in the industry will get on board. If they don't, Saunders worries everyone could be worse off.

Source: Allergan CEO Brent Saunders via Twitter.