Last year turned out to be a disappointing one for new drug approvals with the FDA clearing just 22 new medicines for sale, the lowest number since 2010 and sharply down on 2015's tally of 45.
Several factors led to the decline: Five new drugs that had been scheduled for approval in 2016 ended up winning an early green light at the end of 2015. There was also a decline in drugs being filed for approval and the FDA rejected or delayed more applications in 2016 than in the previous two years.
The healthcare sector - particularly pharmaceuticals and biotechs - had a rough session on Wednesday after the president-elect promised to bring down drug prices.
Sporting sizable gains yesterday afternoon and again this session, the sector has recovered all of Wednesday's slide and more.
Up 1.15% today, the XLV has joined the broader market in the green for the week, as has the IBB. The SPDR S&P Pharmaceuticals ETF (XPH +1.5%) is having the best day of all, but remains marginally lower on the week.
Apparently swayed by his conversation with the president this week, the president-elect says he likes at least some of the Affordable Care Act.
In his first interview since winning the election, Trump tells the WSJ he's a fan of the prohibition against insurers denying coverage because of pre-existing conditions, as well as a provision allowing parents to continue coverage for their children well into their 20s.
“I told [Obama] I will look at his suggestions, and out of respect, I will do that."
ABC News projects the Republicans will retain control of the House of Representatives.
Investors in the healthcare sector have been waiting on the election in order to gauge the likelihood of new legislation or gridlock. Earlier this week, Bloomberg assessed how the sector might react to the different scenarios from today's election.
Total spending on prescription drugs in the U.S. rose 12.2% to nearly $425B in 2015, continuing a steep climb fueled by the introduction of expensive new drugs for cancer and infections, as well as price hikes for older drugs.
The annual report from IMS Health is likely to further fuel the fire of criticism from politicians, healthcare providers, and patients, stating medicines are out of reach and straining budgets.
The average price of branded prescription drugs in the U.S. has doubled in the past five years, a finding that threatens to fuel the political backlash against high prices.
Express Scripts (NASDAQ:ESRX), the country's largest pharmacy group, said the average wholesale price of branded medicines, which are protected by patents, rose 16% last year and was up a total of 98% since 2011.
High drug costs have become a persistent theme in the current U.S. election campaigns, with both the Democratic and Republican frontrunners, Hillary Clinton and Donald Trump, pledging to crack down on elevated prices.
It's been a "remarkable turn" in relative performance, says Deutsche Bank's David Bianco, noting health care was about 1K basis points ahead of the S&P 500 as recently as mid-August, but both are now about flat and neck-and-neck year-to-date. "We find this reversal unwarranted and think health care could surge into year-end," says Bianco, and if the move doesn't come in 2015, it'll surely happen next year. As for valuation, health care is selling for 14.7x 2016E EPS vs. the S&P 500 at 16x - this even as health care's expected 6% sales growth should easily trump that of nominal GDP and the S&P 500. Biano sees 6-9% EPS growth, also better than the S&P.
Focus on the big picture, says Bianco: "We believe growth in health care products will stay strong owing to an aging population and increasing efforts to treat conditions with drugs and maximize the productivity of scarce healthcare labor with as many tools and conveniences as conceivable." He likes S&P 500 biotech, pharma, devices, equipment, supplies, tech, and tools, but is cautious on managed care and other healthcare services and facilities.
Getting out in front of what should be more bashing of their business models at the Democratic debate tonight, the healthcare names (XLV -1.3%) have about doubled the decline in the S&P 500. Within healthcare, it's the biotechs (IBB -3.1%) and pharmaceuticals (XPH -3.2%) leading the way south.
A sharply lower healthcare sector (XLV -3%) has dragged the S&P 500 (SPY -0.2%) into the red and the Nasdaq (NASDAQ:QQQ) down a full 1%. The Dow (DIA +0.4%) remains higher, courtesy of a post-earnings 9% moonshot in Nike.
Biotechs (IBB -5.7%) and Pharmaceuticals (XPH -5.9%) are hardest hit, continuing to feel the pressure from Hillary Clinton's assault on drug-pricing. Gilead (GILD -2.5%), Biogen (BIIB -3.5%), Celgene (CELG -5.4%), Amgen (AMGN -3.6%), Allergan (AGN -4%), Mylan (MYL -5.6%).
Twelve ProShares ETFs will be split on a forward basis while nine will be reverse split.
"All reverse splits will be effective at the market open on May 20, 2015, when the funds will begin trading at their post-split price. The ticker symbol for the funds will not change. All funds undergoing a reverse split will be issued a new CUSIP number, listed above,” as stated in the same press release.
The financial sector (NYSEARCA:IYF) is far and away the leader in U.S. sector ETF outflows year-to-date, with $4.89B exiting, according to XTF.com. Not surprising, as the sector's been one of the poorer performers even after a nice rebound in February.
The behavior contrasts with what's happening in energy (NYSEARCA:XLE), where bottom fishers have helped those ETFs see inflows of $2.97B - more than any other tracked sector in 2015.
Also notable for outflows are industrials (NYSEARCA:XLI) and tech (NYSEARCA:IYW) - this despite market-beating returns so far this year.
The other sector seeing sizable inflows is health care, with a net $2.74B coming in amid the strongest returns of all the major industries.
A Saudi Arabian man who died of Middle East respiratory syndrome (MERS) probably caught the disease from one of his sick dromedary camels that he treated for a nasal discharge a month earlier. Samples taken from the man and camel found a genetically identical virus. This is the first conclusive evidence that camels may be the intermediate hosts of the bug. The exact reservoir the maintains the virus in its ecologic niche has yet to be identified, however.
The Saudi man fell ill about seven days after treating the camel with a topical medicine. He and three friends visited the camels daily but his friends, who had no direct contact with the animal, remained free of the virus.