By Todd Shriber via Iris.xyz

It pays to be discerning in financial markets. The action in biotechnology stocks this year is a reminder of the benefits of that advice. For example, the large-cap Nasdaq Biotechnology Index is up just 0.53% (as of May 24th).

The top four components in the Nasdaq Biotechnology Index are all large-cap stocks, but just one; Amgen Inc. (AMGN), is higher on a year-to-date basis. Celgene Corp. (CELG), another marquee member of the Nasdaq Biotechnology Index, is down 23.16% as of May 24th.

Through about five months of 2018, one thing is clear in the healthcare sector, including biotechnology investments: smaller has been better. Consider this: As of May 24th, the Russell 2000 Index and the S&P SmallCap 600 Index are up 6.28% and 7.55%, respectively, year-to-date. The S&P 500 is up just 2.24%. On May 23rd, the Russell 2000’s healthcare weight was nearly 200 basis points higher than the S&P 500’s. As the chart below indicates, smaller healthcare companies, including biotech names, are playing a pivotal role in the recent resurgence of broader small-cap benchmarks.

On The Prowl Since the start of 2018, a widely cited catalyst for mid- and small-cap biotechnology companies has been speculation that industry consolidation is poised to increase. While mergers and acquisitions (M&A) activity has been brisk since the start of the year, the largest biotech and healthcare companies still have plenty of room to make deals.

On The Prowl

Since the start of 2018, a widely cited catalyst for mid- and small-cap biotechnology companies has been speculation that industry consolidation is poised to increase. While mergers and acquisitions (M&A) activity has been brisk since the start of the year, the largest biotech and healthcare companies still have plenty of room to make deals.

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