1. Biotech investors are sweating the election too much: Gadfly

Biotech investors are sweating the election too much: Gadfly

The US presidential election has made everything feel radioactive; biotech stocks are no exception. A single Hillary Clinton tweet decrying high drug prices sent the Nasdaq Biotech Index (NBI) down 4.7 percent in one day in September 2015.

By: | Published: October 19, 2016 6:27 PM
Since Donald Trump's candidacy and poll numbers began to dissolve into a shouty, orange puddle around October 2, the NBI has dropped as much as 8 percent. Since Donald Trump’s candidacy and poll numbers began to dissolve into a shouty, orange puddle around October 2, the NBI has dropped as much as 8 percent.

The US presidential election has made everything feel radioactive; biotech stocks are no exception. A single Hillary Clinton tweet decrying high drug prices sent the Nasdaq Biotech Index (NBI) down 4.7 percent in one day in September 2015.

Worry about the potential policy (and drug-pricing) ramifications of a Democratic sweep of the presidency and both houses of Congress has provoked a renewed funk in biotech shares lately.

Since Donald Trump’s candidacy and poll numbers began to dissolve into a shouty, orange puddle around October 2, the NBI has dropped as much as 8 percent.

The index tends to rise when Trump performs well and fall when Hillary takes a serious polling lead. But recent stock swings suggest investors are dramatically overrating the potential impact of a Clinton victory and the possibility of a sweep.

Health care is the only sector on the Nasdaq Composite Index to have declined this year, and it’s declined a whole lot.

Big biotechs are some of the most highly weighted stocks in the Nasdaq health care index, and they’re dragging it down.

Meanwhile, six of the 10 worst performers in the S&P 500 this year are biopharma firms.

Biotech stocks seem to be pricing in a worst-case scenario, followed by several more worst-case scenarios.

Some of this is understandable. Hillary has been strongly critical of drugmakers. If her full health-care platform were to become law, it would likely be a drag on drugmakers big and small.

The platform, among other initiatives, supports letting Medicare directly negotiate prices with drug companies. But that’s not likely to happen, even if Trump’s putrid poll numbers hold.

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