Trump’s drug price cut pledge threatens pharma giants

US President Donald Trump suggested he would look at ways to cut drug prices, which pushed Shire (SHP) and Hikma (HIK) lower by up to 2.2%.

Lower commodity prices also hit miners, with Antofagasta (ANTO), Glencore (GLEN) and Randgold Resources (RRS) among the top blue-chip fallers.

The FTSE closed 0.1% lower at 7,338.

West Texas Intermediate and Brent crude oil was flat at $53.30 and $56 per barre, respectively.

Gold declined 0.5% to $1,217 per ounce and copper fell 1.5% to $5,732 per tonne.


Overseas, pharmaceutical stocks were not immune from the pricing threat as Pfizer and Merck fell by approximately 0.7%. As a result, the Dow Jones and S&P nudged lower as the markets opened on Tuesday.

Asian stocks were also under pressure, with sentiment undermined by concerns over Chinese economic growth.


Car insurer Direct Line (DLG) disappointed the market after revealing reduced 2016 profits, which was caused by the reduction in the Ogden discount rate.

The drop in the rate, which is used to calculate compensation payments to victims of car accidents, from 2.5% to -0.75% was more than the expected 1%. This was bad news as the lower the rate, the higher the lump sum required.

Direct Line raised the final dividend 5.4% to 9.7p, taking total dividends for 2016 to 24.6p, but this was half the 50.1p paid in 2015.

Bookmaker Paddy Power Betfair (PPB) continued to struggle with weakness in online gambling. Investors overlooked in-line 2016 results with group EBITDA up 35% to £400m.

Quality assurance provider Intertek (ITRK) rose 4.6% to £37.60 following a strong revenue, earnings and cash performance in 2016. The latter underpinned a 19.3% increase in the dividend to 62.4p.


Industrial dehumidifier equipment supplier Aggreko (AGK) reported full year pre-tax profits of £221m, approximately £1m light of the £222m consensus. It warned 2017 profits will be lower than last year due to the impact of pricing renegotiations in Argentina.

Embattled retailer Sports Direct (SPD) warned the devaluation of the euro against the dollar will hit its gross margin as it has no euro/dollar hedging in place for the next financial year.

Full year pre-tax profit from builders’ merchant Grafton (GFTU) was 8% better than expected, which was supported by a good show in Ireland and the Netherlands. Management was confident enough to open 10 new Selco stores this year and said it is looking for new acquisition opportunities.

The good news helped to push sector peer Travis Perkins (TPK) up 3.2% to £14.87.

Brickmaker Ibstock (IBST) announced its 2016 results beat expectations and anticipates developer clients in the UK to increase their activity levels.

Investors tucked into online takeaway service Just Eat (JE.), which fattened 4.4% as full year results confirmed a positive growth trajectory.

Management was optimistic in its outlook as it guided to 2017 earnings before interest, tax, depreciation and amortisation in a range of £157 to £163m. This was slightly higher than current consensus at £157.4m.


FastForward (FFWD) allocated $3m to pick up a 4.7% equity interest in Nuuvera, a private company focused on medical marijuana opportunities. The stock was flying 33% higher as investors approved of the move.

Air purification tech firm MayAir (MAYA) cautioned that pre-tax profit will be lower than expected at approximately $5.9m in the year to 31 December. It blamed the timing of a $7.1m contract being pushed into the first quarter of 2017.

Spending management platform Blur Group (BLUR) entered final negotiations with a global electronics group for a multiple six figure on-boarding programme across three territories.

If the programme is successful, management said it could lead to a multi-year, multi-million dollar roll-out of its services. Investors were keen to take advantage of the potential opportunity as the stock soared 125% to 15.4p.

Construction support services provider Mountfield Group (MOGP) unveiled an upbeat trading statement. It experienced a strong start to the year and expects to negotiate further pipeline works and contracts. The stock rose 68.8%.

Impatient investors are frustrated that there’s still a lot of work to be done at nickel-copper miner Amur Minerals’ (AMC) Kun-Manie programme as the stock dropped 15.3%.

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