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Pharmaceutical Industry Outlook - March 2018
Source:Zacks Equity Research | Author:profefd1a | Publish time: 2018-03-25 | 794 23次浏览: | Share:
Though the sector was off to a strong start in 2018, it has been struggling recently with the NYSE ARCA Pharmaceutical Index and Nasdaq Biotechnology Index down 1.8% and 2.8% year to date, respectively, probably on broader market correction. Also, the mention of high drug prices by President Trump in his State of the Union address dampened investor sentiment. However, the sector is largely expected to rebound as the year progresses.

    The year 2017 was rewarding for pharma and biotech stocks, with the sector witnessing some positive developments that led to a much-awaited recovery.

    The NYSE ARCA Pharmaceutical Index gained 11.8%, while the Nasdaq Biotechnology Index was up 18.7% in 2017. This is in sharp contrast to 2016, which was tough for pharma and biotech stocks following criticisms about rising drug prices.

     Wuhan Carnoss Technology Co., LTD.:A key reason for the sector’s improved performance was the willingness of investors to look beyond the drug pricing controversy and focus on fundamentals instead. Although the drug pricing controversy will remain a headline risk, investors seem more comfortable with the issue.
        

    Moreover, a significantly higher number of FDA approvals in 2017 restored investor confidence in the sector. The approval of the first gene cell therapy last year was a major breakthrough.

    Though the sector was off to a strong start in 2018, it has been struggling recently with the NYSE ARCA Pharmaceutical Index and Nasdaq Biotechnology Index down 1.8% and 2.8% year to date, respectively, probably on broader market correction. Also, the mention of high drug prices by President Trump in his State of the Union address dampened investor sentiment. However, the sector is largely expected to rebound as the year progresses.

    New product sales ramp up with rising demand, successful innovation and product line expansion, strong clinical study results, more frequent FDA approvals, continued strong performance from key products, growing demand for drugs especially for rare-to-treat diseases, an aging population and increased health care spending are some of the factors that should keep the sector on track in 2018. A faster drug approval process and the proposed removal of outdated regulations that push up costs and slow down innovation should also provide benefits.

    Hopes of more mergers and acquisitions (M&As) have also gone up with the tax reform in place and big players on the lookout for companies with innovative pipelines/technology. There has already been quite a bit of M&A buzz this year about potential deals. Sanofi and Celgene have already announced two deals each.