Biotech is also an important of broader health care ETFs such as XLV and the Vanguard Health Care ETF (NYSEArca: VHT), both of which hit new highs Thursday. For example, biotech accounts for 20% of XLV’s weight. However, investors typically embrace an XLV or VHT for exposure to blue chip pharmaceuticals names, a group that does have some catalysts. [Health Care Delivers as Market Stumbles]

“In July 2013 Pfizer (NYSE: PFE) announced plans to split into three distinct business segments, two innovative (tied to drugs with patent exclusivity beyond 2015 and to vaccine, oncology and consumer health care) and one value segment (consisting of mature drugs),” said Rosenbluth.

“This could improve investor transparency in our opinion. For Merck (NYSEArca: MRK), we see a potential divestiture or spin-off of its consumer and/or animal health units to focus on its drug franchise. We are also encouraged by the earlier than expected start of a rolling FDA filing on MK-3475, a promising anti-PD-1 immunotherapy for advanced melanoma, with the filing to be completed in H1 ’14. But we see sales headwinds over next few years.”

S&P Capital IQ rates XLV and VHT overweight. The research firm also has overweight ratings on the new Fidelity MSCI Health Care Index ETF (NYSEArca: FHLC) and the globally-focused iShares Global Healthcare ETF (NYSEArca: IXJ). In more anecdotal evidence of the depth of health care’s strength, IXJ and the rival SPDR S&P International Health Care Sector ETF (NYSEArca: IRY) also hit new highs Thursday. [Fun With Pharma ETFs]

Health Care Select Sector SPDR

Tom Lydon’s clients own shares of Pfizer.

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