Kennedy injects uncertainty into big pharma

Good morning from the Financial Times. Today is Tuesday, November 26th, and this is your FT News Briefing. Two major criminal cases against Donald Trump are ending, and we look at how big pharma will fare under the incoming US administration. Plus, a new EU rule will allow the block to peek under the hood of Chinese electric vehicles. I'm Sonia Hudson, and here's the news you need to start your day.

The U.S. Department of Justice is dropping two federal criminal cases against Donald Trump. One accused the incoming president of interfering with the 2020 election. The other alleged that he mishandled classified documents. Special counsel Jack Smith said in a court filing yesterday that continuing the cases would violate a longstanding DOJ policy against prosecuting a sitting president.

The filing related to the election interference charge asks for dismissal, quote, without prejudice. That means the case could be refiled later. But for now, this filing closes the book on an unprecedented effort to prosecute a former president.

President-elect Donald Trump's nomination for health secretary sent waves through the U.S. biotech market. Robert F. Kennedy Jr. is skeptical of vaccines and wants to change what medical research the government funds. Here to talk about this uncertain time for the industry is the FT's Oliver Barnes. Hi, Oliver. Hey.

So what exactly does RFK Junior want to do as Health and Human Services Secretary? The uncertainty base stems from what RFK has said publicly about vaccines, about weight loss drugs, about funding for drug development and prescription drugs. He's basically suggested he may pivot spending from prescription drugs, from medicines,

towards chronic disease. And just to emphasize, he would run this department, which has a $1.7 trillion budget, but then has huge wider effects, a cascading effects on different departments. So within HHS, you have FDA, which is the medicines regulator. You have CDC, which is the US, the primary public health agency in the US. You have CMS, which controls the Medicare budget. So the consequences of this role are very widespread.

And how have we seen that concern play out in the market? How big of an impact are of case plans having? We don't really know his plans, right? We're reading between the lines on what he said. But after the announcement that he was Trump's pick, the XBI, which is the index of small biotech companies traded down around 10%, also a whole load of kind of large cap pharmaceutical stocks traded down a bunch too. However,

There has now been a slight improvement in markets in the past few days. The reason is because the picks that RFK has come out with have been somewhat more conciliatory towards industry. That's what the markets are trying to make sense of at the moment. All of our ultimately, how do you think everything that we've been talking about here could affect the future of the industry more broadly?

I think the mood has changed. If you have people atop these regulators and agencies who advance claims that a skeptical of vaccines, who may get into the role and set up a kind of commission to analyze which vaccine should be given out and which are not, even if nothing changes, the simple fact that you've got people indulging in those kind of theories and ideas,

will mean that maybe you have huge public health ramifications. The uptake of vaccines is lower. The environment for pharmaceutical companies to launch vaccines becomes more difficult. So that, I feel, is potentially the most momentous change. It's the environment with which we see medicines. Oliver Barnes is the FT's US pharmaceutical correspondent. Thanks, Oliver. Thanks.

Italy's unit credit has launched another takeover bid, this time for a domestic rival, Banco BPM. Unit credit is offering 10 billion euros. If the deal goes through, it would create Europe's third largest lender by market capitalization.

But it's not the first time this year that the bank has moved to take over a competitor. Unicredits surprised everyone by rapidly building a stake in the German Commerce Bank. But it got a lot of pushback from state politicians and unions. That put the plans on hold. Meanwhile, the Italian government has also voiced concerns about Unicredits bid to take over BPM.

Europe's electric vehicle industry has been having a hard time lately. Companies are struggling to compete with the flood of cheap cars and batteries from China. But now the EU has a plan to protect its EVs. And it might look a little familiar to those of us who follow trade. The FT's Alice Hancock is here to give me the rundown. Hey, Alice. Hey. So walk me through what Brussels is doing here and why.

So the EU has been moving towards a very ambitious energy transition. It has a goal of reaching net zero by 2050. And the bottom line of what the EU is really trying to do here is to protect the industries that it thinks are critical for making that transition. So batteries in this instance, other things like hydrogen, wind turbines and so on.

What they're doing here is they're adding a criteria to a round of bids for EU subsidies, which will basically require that for Chinese companies to benefit from those subsidies, they have to A, have a plan or factory in the EU and B, transfer their intellectual property here as well.

All right, so in order to get subsidies, they need to do some technology transfers. And this strategy, if I'm remembering my trade history correctly, it isn't that new, right?

Very good, yeah. Officials have described it to us as kind of playing China at its own game because for a long time China has forced EU companies to transfer IP to China in order to access the Chinese market. But the critical difference here is that the EU is not engaging in per se forced technology transfer as some people brand what China is doing because it is offering that in exchange for subsidies. So it should be within World Trade Organization rules.

But I guess I'm also wondering, how does the EU's trade plan fit in with some of the things that it's already done to shore up the green industry?

Sure, I mean, let's be honest, at the moment, this looks like a small step, but as you say, it's part of this much wider set of all sorts of different initiatives which are aimed at propping up the EU's car industry, which is having a very tough time at the moment. Chinese EVs are much cheaper, they're coming in undercutting and so on. Recently, last month, in fact, the EU announced tariffs of up to 35% on Chinese EVs coming in to

the EU on top of existing 10% tariffs and there's also an upcoming auction for green hydrogen that stipulates that no more than a quarter of the parts in the electrolyzes to make the hydrogen can be made in China. So there's all these kind of gradual steps, putting bricks on a wall if you like to protect EU industry against Chinese competition.

And how do you think that this EU strategy might ultimately play out? Are things like technology transfers, tariffs, and subsidies going to end up boosting its green tech ambitions?

It's a good question. I mean, here in the EU, people say it's good to protect the EU industry, but at the same time we need some of those cheap and actually very high quality Chinese imports to come in order to meet the ambitious climate goals that the EU has. And Europe's member states are pretty cash-strapped at the moment, so it's not an easy equation. On the other side, in Beijing, China's commerce ministry has said to car makers that they shouldn't make heavy investments in Europe and told them to

only create production lines in Europe for the final step to make sure that technology doesn't get transferred, I guess. It raises tensions on both sides. Alice Hancock is an EU correspondent for the FT. Thanks, Alice. Thanks a lot.

Before we go, Romania's election has been upended by TikTok. A pro-Russia far-right candidate surprisingly won the country's first round of presidential elections on Sunday. Colleen Georgescu isn't associated with a party and said he spent no money on his campaign.

But he did go viral on TikTok right before voters went to the polls, with videos of him riding a white horse and practicing martial arts. A Romanian historian told the FT that because mainstream parties there have struggled to stay credible, quote, voters are vulnerable to messages that have no connection with reality.

You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.