To paraphrase Donald Rumsfeld – with Hillary Clinton’s defeat, her policy known unknowns can be discounted. With Donald Trump heading to the White House, we now face unknown unknowns.

Trump has defied expectations to be elected the 45th President of the United States of America. The result has caught markets off-guard, with indexes looking like a rollercoaster across the globe. However, with the threat of Clinton’s drug price regulation off the cards, there appears to be a silver lining for biotech stocks. Here we look at the potential impact of the US election on biotech in the UK and globally.

Biotech stocks rally on Trump win

Ahead of the election, a report by US analyst firm Leerink Partners said that $50 billion had been wiped from biotech stocks as markets predicted a Clinton win and a Democrat-controlled Congress. It concluded that biotech stocks could bounce back by 20% if Trump and the Republicans were successful.

As the UK market opened this morning, pharmaceutical shares rose in the FTSE 100 (which overall went down), with Shire, Hikma, GlaxoSmithkline and AstraZeneca all up between 2% and nearly 5%.

In the US, the iShares Nasdaq Biotechnology exchange-traded fund, which tracks biotech stocks like Gilead Sciences, Celgene and Biogen, rose 9% when the market opened. Pharma stocks also rallied – Pfizer up 10%, Merck 5% and Abbvie 7%.

Investors are clearly relieved. The Republicans have held onto both the Senate and the House of Representatives. As the Party has fiercely fought-off drug price controls in the past, this makes it very unlikely drug prices will see strong regulation. However, commentators are still divided on what the election result means for the industry. Trump’s health plans have centered on ripping up Obamacare “on day one”, whereas Clinton was set to expand the program. Adam Feuerstein, a columnist at TheStreet, says the worry could shift to reduced prescription drug volumes and lower sales if Obamacare is repealed.

Trump has also promised to remove the ban on importing medicines and to speed up the approval of generics, which will make the market more difficult for new medicines. This has been reported as a boon for generic manufacturers and could result in a more European-style healthcare market.

Wider Trump policy and its effect on the life sciences

While he has offered few details on policies for life sciences research, Trump said last year that he has heard “terrible” things about the US National Institutes of Health. In the run-up to the election and now after, US scientists in academia and industry have expressed concern that a Trump Presidency could result in less Government funding for biomedical research – potentially as a result of lowered taxes – and questions have been raised about his approach to evidence. He has repeatedly pushed the myth that vaccines cause autism. “I feel sick to my stomach,” a research director of a small biotech focused on autism therapies told BuzzFeed News about the prospect of a Trump administration.

Ben Carson, a heart-surgeon who dropped out of the Republican primary race and joined Trump’s campaign, has taken a more sensible approach to vaccines, and after being thanked in Trump’s victory speech could be a close adviser on health policy to the new President.

In his speech, Trump took a conciliatory tone. He promised to be a President for everyone. He said he would invest in infrastructure, double US economic growth and to put America first but “deal fairly with everyone, all nations and all people”. However, everyone agrees that his election signals a significant change to US foreign and domestic policy.

Trump supported Brexit and is said not to be a fan of the EU. He even had Nigel Farage campaigning alongside him. Some commentators have said this could mean a stronger “special relationship”. Trump is also against the Transatlantic Trade and Investment Partnership (TTIP) between the US and EU, which would exclude the UK if it went ahead after Brexit.

Trumps notorious stance on immigration — including a pledge to bar Muslims from entering the United States — will raise concerns that talented foreign scientists will be put off from working or studying at US institutions. And it is unlikely that Trump will appoint Supreme Court judges more positively minded towards intellectual property and research in life sciences, this may prove to be a competitive advantage for the UK sector.

Proposition 61 defeated

American drug companies have also avoided price regulation in California, where Proposition 61 was defeated in a vote that happened alongside the election. The legislation aimed to cap how much the state can spend on the prescription drugs it buys through programs like Medicaid or insurance plans for state employees. If it passed, it would have been a huge change to how drug pricing operates in the US that could trigger the introduction of similar legislation across the country.

Keep calm and biotech on

As we have demonstrated since the EU Referendum result earlier this year, the strong fundamentals of our sector in the UK remain unchanged. The American election was never going to change that. Just this week Syncona revealed their part in a new £1 billion listed fund that will be a real boost for UK life sciences in the coming years, and today saw the official opening of the Francis Crick Institute in London. These are all positive developments for the UK ecosystem that will maintain and strengthen our position as the third global life sciences cluster.