Neil Woodford’s equity income and patient capital funds have seen several holdings suffer on pledges made by US presidential candidate Hillary Clinton to tackle unfair pricing.
The Woodford Equity Income fund returned 1.9 per cent in the month ended 31 August, in line with the benchmark. The net asset value for the Woodford Patient Capital trust fell 2.4 per cent.
Head of investment communications Mitchell Fraser-Jones says the comments revolved around EpiPen, which has seen its price rise almost 500 per cent since 2007 making it unaffordable for a lot of patients.
At the end of August, Clinton called price gouging on the medicine “outrageous” and called for its price to be dropped.
“It’s wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them,” Clinton said in a statement.
The auto-injector is owned by speciality pharmaceutical company Mylan, but also impacted share prices for AstraZeneca, GlaxoSmithKline and Alkermes.
AstraZeneca and GlaxoKlineSmith are the equity income fund’s largest holdings, accounting for 8.7 per cent and 8.1 per cent respectively.
Healthcare accounts for 36.9 per cent of the fund, compared to 9.8 per cent in the benchmark.
In the Patient Capital trust, Prothena, which was also hit by Clinton’s comments is the top holding, accounting for 14.1 per cent.
“We do not believe that Clinton’s rhetoric undermines our investment case for investing in genuinely innovative companies within the sector and, although we do have some sympathy with her concerns about instances of egregious pricing behaviour within the industry, they are not widespread,” Mitchell-Jones says.
Mitchell-Jones points out that not all pharma stocks suffered in August, with Theravance Biopharma’s delivering positive returns on its half-year results and an update on progress within its pipeline.
Speaking to the wider market, Mitchell-Jones says it is “difficult to argue that the market is cheap”.
He predicts the UK stock market will deliver “low to mid-single digit” returns, while the fund is “well-positioned” to deliver high-single digit long-term annualised returns.