The tragedy of health care has spread to biopharmacy stocks



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Health care stocks had another bad day as investor fears also spread to the biotechnology and pharmacy sectors.

Investor concern seems to have spread to retailers of health products, health care companies and health insurers to include biopharmaceutical companies on Thursday. The Three Biggest Losers in Health Care Select's SPDR Fund ETDR Sector

XLV + 0.16%

were Regeneron Pharmaceuticals Inc.

REGN, -2.81%

, Incyte Corp.

INCY, -0.48%

and Amgen Inc.

AMGN, -2.74%

The health care ETF lost another 0.2% after falling 3% on Wednesday. It is now down 1% for the year, while the S & P 500 index

SPX, + 0.16%

recorded gains of about 16%.

Pfizer Inc.

PFE, -1.25%

, Johnson & Johnson

JNJ, -0.72%

, Merck & Co. Inc.

MRK, -0.99%

and Walgreens Boots Alliance Inc.

WBA, -0.92%

were among the Dow Jones Industrial Average

DJIA, + 0.42%

first five losers.

The recent decline in health care stocks comes at a time of uncertainty for the future of US health care policy, as lawmakers demand tougher regulations and greater transparency over drug prices and issues. swirling around the likelihood that the country will introduce a single payer system, also known as "Medicare for All".

Investors initially seemed more concerned about the impact of such a system on health care management companies and insurers. But "the sub-sectors are all naturally linked to each other," said Jefferies' Jefferies on Thursday in a note to customers, describing biopharma's success as "collateral damage".

Biopharmaceutical companies had a relatively strong start to the year, but equities have fallen since. The iShares Nasdaq Biotechnology ETF

BWI -0.57%

fell 1% on Thursday, and although the sector grew 8% for the year, it is still behind the S & P 500 by 8 percentage points. The SPDR S & P Pharmaceuticals ETF

XPH, + 0.03%

, up 6% for the year, is almost 10 points behind the S & P 500.

The health sector has suffered from other distressing developments, particularly in 2010, when the Affordable Care Act was proclaimed in March. The sector lagged the S & P 500 by 5.1 percentage points in April of that year as investors faced the possibility that mandatory coverage would reduce the profits of health insurers and insurance companies. medical service companies.

But health care has deteriorated significantly this year, with a delay of 16.7 percentage points on the S & P 500, the largest performance gap since 2006.




"We are currently at the heart of one of the worst setbacks of the last 20 years," said Ross Muken, an analyst at Evercore ISI, in a note sent Thursday to his clients. "I think we can officially confirm that health care has gone into a sort of panic," he wrote.

This panic was the focus of concern on Tuesday after the actions of UnitedHealth Group Inc.

A H, + 2.26%

fell despite better than expected results, while strengthening its outlook for the year. This did not stop the already declining stock from dropping another 4% to $ 221.

Analysts have blamed the disparity between the positive results of UnitedHealth and the response of actions to concerns raised by Sanders' proposal for Medicare for all. "We think the market is attributing a disproportionate likelihood that a Medicare-for-all proposal will become a reality," said Charles Rhyee, an analyst at Cowen.

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