As the political cycle matures in 2016, the political posturing continues to plague the entire healthcare cohort. Utilizing the biotech sector and drug pricing as a scapegoat for political gains has translated into the sector posting sharp declines over the past year. Using the iShares Biotechnology Index ETF (PACF:IBB) as a proxy for the biotechnology sector, this cohort has fallen from $401 in July of 2015 to $240 in February of 2016 or alternatively a 40% decline. This sharp decline coincided with heated political rhetoric aimed at the collective cohort of healthcare and more specifically biotech-related companies. This cynical sentiment by political frontrunners was largely rooted in the pricing of drugs. It’s noteworthy to highlight that this specific segment of the industry (i.e. drugs) comprises less than 10% of the total cost of healthcare. As candidate threats via legislative action geared towards reining in the costs of drugs unfolded, these actions negatively reverberated through healthcare and biotech stocks alike. The political posturing surrounding potential plans to reign in drug costs are now largely priced into many stocks within the healthcare umbrella. I contend that after the roughly year-long political sell-off the biotech cohort looks attractive at these levels. Once the political cycle is complete later this year, these stocks will likely benefit from the mere absence of political headwinds. Taken together along with the difficulty of enacting any legislative action to regulate the industry this may represent a buying opportunity that’s been presented by extraneous political events. Continue reading "Political Posturing Continues To Pummel Biotech"
As the political cycle unfolded throughout 2015, the entire healthcare cohort posted shape declines, this was particularly true for the biotechnology sector. Using the iShares Biotechnology Index ETF (ticker IBB) as a proxy for the biotechnology sector, this cohort fell from $401 in July to $284 in September or alternatively a 29% decline. This shape decline coincided with heated political rhetoric aimed at the collective cohort of healthcare and more specifically biotech related companies. This cynical sentiment by political frontrunners was largely rooted in the pricing of drugs. As candidate threats via legislative action geared towards reining in the costs of drugs unfolded, these actions negatively reverberated through healthcare and biotech stocks alike. The political posturing surrounding potential plans to reign in drug costs are now largely priced into many stocks within the healthcare umbrella. I contend that after the recent sell-off the biotech cohort looks attractive at these levels. Once the political cycle is complete in 2016, these stocks will likely benefit from the mere absence of political headwinds. Additionally, as the candidate pools thin out many remaining candidates gradually move towards the middle to appease a broader audience. Taken together along with the difficulty of enacting any legislative action to regulate the industry this may represent a buying opportunity that’s been presented by extraneous political events. Continue reading "Will Political Headwinds For Biotech Subside In 2016?"
The culmination of extraneous events such as sustained lower oil prices, an ostensibly imminent rate hike and weakness in China have indiscriminately plummeted the biotech sector as of late. Now a second and more specific wave of sector related stories such as price gouging by Turing Pharmaceuticals and the subsequent comments by Hillary Clinton have exacerbated this sector decline. These former events are seemingly unrelated to the biotechnology sector, yet this group has been taken along for the downhill ride with the broader indices in lock-step. The latter events have been detrimental to all biotechnology stocks as this is a direct threat to pricing power and our capitalism based structure.
The unprecedented secular growth streak in biotech has been more than tested as of late with biotechnology officially in bear territory. These latest events, some unrelated and others directly related to the biotech sector, may provide a unique opportunity to add to a current position or initiate a position over time as this correction continues to unfold. Based on annual and cumulative performance throughout both bear and bull markets, The iShares Nasdaq Biotechnology (ticker symbol: IBB) may provide the opportunity investors have been waiting for in the face of our current market conditions. IBB is down 25% from its 52-week high, shares have plunged from $400 to $295 per share during the recent market weakness, presenting a potential buying opportunity.
Price gouging and Hilary Clinton
Recently, Turing Pharmaceuticals and its CEO Martin Shkreli garnered criticism after the company boosted the price of Daraprim from $13.50 to $750 per pill, resulting in a greater than 5,400% increase after acquiring the drug in August. This price gouging of a decades’ old drug drew fire from the general public on social media and, in particular, the presidential candidate and Democratic front-runner Hillary Clinton (Figure 1).
Figure 1 – Tweet by presidential candidate and Democratic front-runner, Hillary Clinton, referring to the drug price gouging
This price gouging incident has elicited widespread backlash, and in my opinion rightfully so, however this criticism has been unfairly painted across the entire sector. It’s noteworthy to point out that Democratic lawmakers have requested pricing policies and further information on pricing of drugs by Canadian drug maker Valeant Pharmaceuticals. Despite the public backlash and public statements by lawmakers, I believe this is a temporary headwind rooted in the public relations arena. Continue reading "The Bruised And Battered Biotech Sector - Buying Opportunity Arises"
Congratulations to all readers of this blog.
I would like to thank you for participating in all our polls that we have posted over last several months. The predictive power of these visitor blog polls has been amazing.
Not only did you predict months ago that the dollar had not bottomed out, but the collective poll indicated negativity for the U.S. economy. Both of these predictions turned out to be 100% correct.
Our latest poll is asking who will be the Democratic nominee for president? The results have been very interesting. I believe our poll voters have it correct, 44% of you indicated that you are just plain tired of this going on for so long. In fact, it was quite a relief last week to see the Pope Benedict on television instead of Clinton or Obama. So once again I believe the poll has it right, the majority of people are just tired of the whole thing.
Today being Tuesday, it's time for the Pennsylvania primary. Our poll indicates that Senator Barack Obama is leading Senator Hillary Clinton overall and will be the Democratic nominee for president. Obama leads Clinton by a two to one margin overall . We did not do a poll for Pennsylvania as we believe that it was too narrow a focus for our users. We believe Obama’s lead on this poll is significant as it is coming from a financially related website.
Tonight, I'm sure many of us will be glued to CNN watching the results come in precinct by precinct. We are all hoping for an end to this incredibly long process to nominate a candidate.
The purpose of this blog posting today is to thank you for participating in all of our previous polls and encourage you to vote in new polls that we are planning in the months ahead.
One thing I found out today on this blog is that you can actually e-mail a friend on any of the blog postings. You may like to do this with some of our videos.
Here’s how you do it. At the end of every post, you will see a number of little icons that help “spread the word”. To the right of that, you will see several links called: a promo, print, e-mail and comment.
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Thanks for taking the time to read this brief posts and lets see what happens tonight with the Democratic primary in Pennsylvania. All the best in life and in the markets.
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Announcing the next president of the United States of America ...
Our smart blog readers have voted, and the poll results are in.
Announcing the next President of the United States of America ... Barack Obama.
You can agree or disagree with the results, but the votes are in, and our blog readers have an awesome track record for getting it right. Having predicted the fall in stocks, the rise in gold, 100 dollar oil and the current recession, our blog readers views are important, serious and accurate.
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Blog readers predict that Barack Obama will be the next President of the United States of America with 37% of the vote.
Here's what the other contestants received in votes.
We will see ...
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