While the U.S. markets rose to fresh highs in Monday's trading session, Gilead Sciences Inc. (GILD) – one of the foremost U.S. biotech companies – recorded its largest single-day fall since its January 1992 initial public offering after the country's biggest manager of pharmacy benefits entered into an exclusive agreement with a rival drug maker.
Express Scripts (ESRX), the largest prescription-management company in the U.S., said that it has secured a lower price for a newly approved hepatitis C drug produced by AbbVie Inc.(ABBV) and that it will no longer cover Gilead's drug.
In exchange for securing the drug at a lower price, Express Scripts has struck a deal with AbbVie to provide its drug as the sole option for treating hepatitis C.
AbbVie's Viekira Pak drug indicated to treat hepatitis C costs $83,319 for a typical 12-week plan, lower than the $84,000 for a 12-week course charged by Gilead's blockbuster treatment Sovaldi. Sovaldi's high price in the U.S. has already drawn a lot of criticism from U.S. health insurers, politicians and pharmacy benefit managers (read: Biotech ETFs Slip on Gilead Weakness; Buying Opportunity Now?).
In fact, AbbVie's newly approved drug is also cheaper than Gilead's newest one-pill regimen that combines Sovaldi with another drug and costs $94,500 for 12 weeks.
Market Reaction
This exclusive deal between AbbVie Inc. and Express Scripts has dragged Gilead shares down into the red, as GILD plunged 14.34% at elevated volumes of 72.5 million shares – more than four times the average daily volume – to close at $92.90 on Monday's trading.
The move has reignited concerns among investors who now fear that pharmaceutical companies will have to give in to pricing pressure from U.S. insurers and lawmakers over specific medications. This will likely hit the bottom line of these companies.
Weakness in Gilead dragged down other biotech companies as well. While Amgen (AMGN) lost 3.3%, Celgene (CELG) and Biogen Idec (BIIB) were down 3.1% and 2.3%, respectively.
The weakness within the overall biotech space also dragged biotech ETFs lower. Below, we have highlighted three biotech ETFs, which plunged the most in Monday's trading session as a result of these new developments (read: Buy These Top Ranked ETFs on Solid Biotech Stock Earnings).
Market Vectors Biotech ETF (BBH)
This fund tracks the Market Vectors U.S. Listed Biotech 25 Index, holding 27 securities in the basket with a tilt toward large cap and growth stocks. The product has so far amassed $679.8 million in its asset base and sees moderate trading volumes of roughly 110,000 shares a day.
Gilead, Amgen and Celgene occupy the top three spots in the fund with a combined exposure of 35%.
The fund lost 3.7% on Monday's trading session but has returned a handsome 38% this year. The fund currently has a Zacks ETF Rank #1 or Strong Buy rating.
iShares Nasdaq Biotechnology ETF (IBB)
This fund provides exposure to 155 firms by tracking the Nasdaq Biotechnology Index. IBB is one of the most popular funds in the biotech space with an AUM of $6.8 billion and an average trading volume of 1.5 million shares (see: all the Healthcare ETFs here).
Biogen, Gilead and Celgene are the top three holdings with 8.9%, 8.2% and 7.9% allocations, respectively. The ETF has lost 2.6% on Monday but is up 40% this year. IBB currently has a Zacks ETF Rank #2 or Buy rating.
Dynamic Biotech & Genome (PBE)
This fund provides exposure to 30 firms by tracking the Dynamic Biotech & Genome Intellidex Index. Biogen, Gilead and BioMarin Pharmaceuticals occupy the top three spots with a combined exposure of 16%.
The product has amassed $467.2 million in its asset base while it trades in lower volumes of 55,000 shares per day. The expense ratio comes in at 0.63% and the fund has returned 42% this year. PBE currently has a Zacks ETF Rank #2 or Buy Rating (read: The Complete Guide to Biotech ETFs).
Bottom Line
Despite the recent weakness in the above ETFs, investors can continue to stay invested. This is especially true as solid corporate earnings results, strong fundamentals within this corner, increasing merger and acquisition activities and expansion into emerging markets will continue to fuel growth in Biotech stocks and the related ETFs.
Moreover, all the above ETFs have a solid Zacks ETF Rank and are thus likely to continue with their winning streak once the current turbulence ends.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis Report
ABBVIE INC (ABBV): Free Stock Analysis Report
MKT VEC-BIOTECH (BBH): ETF Research Reports
ISHARES NDQ BIO (IBB): ETF Research Reports
PWRSH-DYN BIO (PBE): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Market News and Data brought to you by Benzinga APIsExpress Scripts (ESRX), the largest prescription-management company in the U.S., said that it has secured a lower price for a newly approved hepatitis C drug produced by AbbVie Inc.(ABBV) and that it will no longer cover Gilead's drug.
In exchange for securing the drug at a lower price, Express Scripts has struck a deal with AbbVie to provide its drug as the sole option for treating hepatitis C.
AbbVie's Viekira Pak drug indicated to treat hepatitis C costs $83,319 for a typical 12-week plan, lower than the $84,000 for a 12-week course charged by Gilead's blockbuster treatment Sovaldi. Sovaldi's high price in the U.S. has already drawn a lot of criticism from U.S. health insurers, politicians and pharmacy benefit managers (read: Biotech ETFs Slip on Gilead Weakness; Buying Opportunity Now?).
In fact, AbbVie's newly approved drug is also cheaper than Gilead's newest one-pill regimen that combines Sovaldi with another drug and costs $94,500 for 12 weeks.
Market Reaction
This exclusive deal between AbbVie Inc. and Express Scripts has dragged Gilead shares down into the red, as GILD plunged 14.34% at elevated volumes of 72.5 million shares – more than four times the average daily volume – to close at $92.90 on Monday's trading.
The move has reignited concerns among investors who now fear that pharmaceutical companies will have to give in to pricing pressure from U.S. insurers and lawmakers over specific medications. This will likely hit the bottom line of these companies.
Weakness in Gilead dragged down other biotech companies as well. While Amgen (AMGN) lost 3.3%, Celgene (CELG) and Biogen Idec (BIIB) were down 3.1% and 2.3%, respectively.
The weakness within the overall biotech space also dragged biotech ETFs lower. Below, we have highlighted three biotech ETFs, which plunged the most in Monday's trading session as a result of these new developments (read: Buy These Top Ranked ETFs on Solid Biotech Stock Earnings).
Market Vectors Biotech ETF (BBH)
This fund tracks the Market Vectors U.S. Listed Biotech 25 Index, holding 27 securities in the basket with a tilt toward large cap and growth stocks. The product has so far amassed $679.8 million in its asset base and sees moderate trading volumes of roughly 110,000 shares a day.
Gilead, Amgen and Celgene occupy the top three spots in the fund with a combined exposure of 35%.
The fund lost 3.7% on Monday's trading session but has returned a handsome 38% this year. The fund currently has a Zacks ETF Rank #1 or Strong Buy rating.
iShares Nasdaq Biotechnology ETF (IBB)
This fund provides exposure to 155 firms by tracking the Nasdaq Biotechnology Index. IBB is one of the most popular funds in the biotech space with an AUM of $6.8 billion and an average trading volume of 1.5 million shares (see: all the Healthcare ETFs here).
Biogen, Gilead and Celgene are the top three holdings with 8.9%, 8.2% and 7.9% allocations, respectively. The ETF has lost 2.6% on Monday but is up 40% this year. IBB currently has a Zacks ETF Rank #2 or Buy rating.
Dynamic Biotech & Genome (PBE)
This fund provides exposure to 30 firms by tracking the Dynamic Biotech & Genome Intellidex Index. Biogen, Gilead and BioMarin Pharmaceuticals occupy the top three spots with a combined exposure of 16%.
The product has amassed $467.2 million in its asset base while it trades in lower volumes of 55,000 shares per day. The expense ratio comes in at 0.63% and the fund has returned 42% this year. PBE currently has a Zacks ETF Rank #2 or Buy Rating (read: The Complete Guide to Biotech ETFs).
Bottom Line
Despite the recent weakness in the above ETFs, investors can continue to stay invested. This is especially true as solid corporate earnings results, strong fundamentals within this corner, increasing merger and acquisition activities and expansion into emerging markets will continue to fuel growth in Biotech stocks and the related ETFs.
Moreover, all the above ETFs have a solid Zacks ETF Rank and are thus likely to continue with their winning streak once the current turbulence ends.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis Report
ABBVIE INC (ABBV): Free Stock Analysis Report
MKT VEC-BIOTECH (BBH): ETF Research Reports
ISHARES NDQ BIO (IBB): ETF Research Reports
PWRSH-DYN BIO (PBE): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in
