The prices of drugs are rising and while this may not be welcome news for patients, it’s the perfect elixir for pharmaceutical-focused ETFs to generate profits to help investors cure ailing portfolios and in the case of the Daily Pharmaceutical & Medical Bull 3X Shares (NYSEArca: PILL), it could provide three times the prescription strength.
PILL seeks 300% of the daily performance of the Dynamic Pharmaceutical Intellidex Index, which consists of common shares of companies that are principally engaged in research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. In the year-to-date chart, PILL has made a move above its 50-day moving average since mid-May and the success of PI could largely depend on whether government intervenes to cut drug prices.
U.S. President Donald Trump is already lambasting the pharmaceutical industry for the rising costs associated with prescription drugs, notably his criticism of pharmaceutical giant Pfizer. This could give pause to other drug companies when it comes to further price raising.
“By putting pressure on one particular company, I think all the companies are saying: We don’t want to be Pfizer,” said Sarissa Capital Management chief investment officer Alex Denner. “Even if they maybe raise prices in a different way – if they typically raise prices in a different way or do it on a different subset of products, they’re going to be thinking twice.”