LONDON, Nov 7 (Reuters) - Healthcare stocks rallied with the broader market in Europe on Wednesday as results of mid-term U.S. elections were seen as reducing the likelihood of legislative action to cut medical costs in the world’s biggest and most profitable market.
Germany’s Fresenius Medical Care, the world’s largest dialysis company, was the top gainer, rising 8 percent as California rejected a proposal that would have limited the rates dialysis clinics can charge commercially insured patients.
Chief Executive Rice Powell welcome the rejection of Proposition 8, which he said would have “dangerously reduced access for dialysis patients in California”, the most populous U.S. state.
Denmark’s Novo Nordisk was another notable winner, adding 2 percent. The world’s top diabetes care group is heavily reliant on premium-priced U.S. drug sales and vulnerable to potential policy actions that might ratchet down spending.
Although the Democrats, who have talked tough on tackling rising healthcare costs, won control of the House of Representatives, an expanded Republican majority in the Senate now points to political gridlock, which will make it difficult to pass legislation.
A Democratic sweep of both House and Senate could have sparked a sell-off in pharma, biotech and drug supply chain stocks, analysts said.
Healthcare has served as something of a safe haven for U.S. investors in recent months, amid a sharp fall in tech stocks, with the sector rising nearly 10 percent so far this year against 3 percent for the overall S&P 500.
Elsewhere in the European healthcare sector, GlaxoSmithKline gained 1.3 percent and medical technology group Smith & Nephew added 1.4 percent. (Reporting by Ben Hirschler Editing by Peter Graff)