As the political cycle enters 2016, political posturing continues to pummel the entire healthcare cohort and more notably biotech stocks. Utilizing the biotech sector and drug pricing as a scapegoat for political gains has translated into the sector-wide declines over the past year. Utilizing the iShares Nasdaq Biotechnology ETF (NASDAQ: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% haircut. This sharp decline coincided with heated political rhetoric aimed at the collective cohort of healthcare and more specifically biotech companies. This cynical sentiment by political front-runners was largely rooted in the pricing of drugs. It's noteworthy to highlight that this specific segment of the healthcare industry (i.e. drugs) comprises less than 10% of the total cost of healthcare. Per Allergan (AGN) CEO Brent Saunders in a recent interview with Jim Cramer on Mad Money:
"Whoever it is (presidential candidate), it's rhetoric, you have to parse the rhetoric from the reality," "I think going after an industry that comprises less than ten-percent of the total cost of healthcare, drug price increases are highly negotiated, drugs do save the system money", "going after the ten-percent that does so much good for society is really just rhetoric." - Brent Saunders, CEO Allergan
As candidate threats via legislative action geared towards reining in the costs of drugs continue to unfold, these actions negatively reverberate through healthcare and more specifically biotech stocks alike. The political posturing surrounding potential plans to reign in drug costs is now largely priced into many stocks within the biotech umbrella. I contend that after the roughly year-long politically induced 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
