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.
These aren’t the only plays, however. You can also own biotechnology companies and pharmaceutical purveyors in broad health care ETFs, which can be found in the ETF Analyzer.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.