Healthy Skepticism Library item: 7236

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Nichols C.
Drug Sector Drops Post-Election
The Street.com 2006 Nov 8
http://www.thestreet.com/_yahoo/newsanalysis/pharmaceuticals/10320839.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Abstract:

Drug stocks were taking a beating Wednesday as traders feared a Democratic Congress would mean bad news for big pharmaceutical companies like Merck (MRK – commentary – Cramer’s Take – Rating) and Pfizer (PFE – commentary – Cramer’s Take – Rating).
Those two were lower, but they were far from alone. Bristol-Myers Squibb (BMY – commentary – Cramer’s Take – Rating) was losing 1.4% to $24.74, Wyeth (WYE – commentary – Cramer’s Take – Rating) was down 1.7% to $50.67, and Eli Lilly (LLY – commentary – Cramer’s Take – Rating) was off 0.9% to $56.48.

On Tuesday during the midterm elections, the Democrats took control of the House of Representatives for the first time in 12 years, and though the Senate remains up for grabs, at the very least the GOP’s lead there has been narrowed.

Two Senate races — one in Montana and another in Virginia — are too close to call, but Democrats have already picked up four slots in the upper chamber.

For investors in the drug sector, the concern is that the Democrats will, among other items on their agenda, move to control if not reduce the price of prescription medications.

Rep. Nancy Pelosi, a California Democrat in line to be the next Speaker of the House, has said she will push for laws that will let the government negotiate directly with pharmaceutical makers in buying drugs for Medicare.

Of course any measures that pass the House still have to get through the Senate, where practically any proposed legislation could meet its end since neither the Republicans nor the Democrats will hold a heavy majority.

At any rate, sellers are for now having their way. Merck was down 3.7% to $44.19, Pfizer was off 1.8% to $26.56, and Schering-Plough (SGP – commentary – Cramer’s Take – Rating) was giving back 3.4% to $22.04.

Foreign drugmakers that trade shares in the U.S. were also weaker, with GlaxoSmithKline (GSK – commentary – Cramer’s Take – Rating) down 1.6%, Novartis (NVS – commentary – Cramer’s Take – Rating) off 1%, and AstraZeneca (AZN – commentary – Cramer’s Take – Rating) dropping 1.8%.
Meanwhile, biotech stocks and stem-cell researchers are generally believed to be safer from or even boosted by Democratic legislative efforts.

Trading was mixed for the big biotechs, with Genentech (DNA – commentary – Cramer’s Take – Rating) up 1.1%, and Cephalon (CEPH – commentary – Cramer’s Take – Rating) higher by 0.9%, but Amgen (AMGN – commentary – Cramer’s Take – Rating) and Biogen Idec (BIIB – commentary – Cramer’s Take – Rating) both slipping 0.8%.

As for the stem-cell stocks, Geron (GERN – commentary – Cramer’s Take – Rating) was up 4%, ViaCell (VIAC – commentary – Cramer’s Take – Rating) was adding 3% and StemCells (STEM – commentary – Cramer’s Take – Rating) was rising 11%.