Pharmaceutical exchange traded funds (ETFs) are poised to come roaring back after a lackluster 2010. Just say…yes?
Last year, pharma underperformed as economic crisis and high joblessness led people to cut back on “non-essentials.” Unfortunately, prescriptions often got lumped into that class. Cost-consciousness will likely persist, but therein lies the opportunity.
- Americans are forecast to fill up to 5% more prescriptions this year
- Big players like Pfizer (NYSEA: PFE) and Merck (NYSE: MRK) are about to lose their patents on blockbuster drugs; it’s not great for them, but it’s great for makers of generics, reports Marc Lichtenfeld for Investment U. [Pharmaceutical ETFs: Drug Companies Roar Back.]
- Hester Plumridge for The Wall Street Journal reports that personalized medicine is becoming a big buzzword in the industry. Such medicine uses genetic information to target drugs only to patients on whom they will work, which could save money for governments and health-care providers. But it could take a chunk out of pharmaceutical company sales. [Dissipate The Risk In Biotechnology ETFs.]
Now that we’ve got that out of the way, here are a few of your options for playing this market:
- iShares Dow Jones U.S. Pharmaceuticals (NYSEArca: IHE)
- PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP)
- SPDR S&P Pharmaceuticals (NYSEArca: XPH)
- iShares MSCI Israel (NYSEArca: EIS): 23% of EIS goes to Teva Pharmaceuticals (NYSE: TEVA), the world’s largest maker of generic drugs.
Tisha Guerrero contributed to this article.