We will see how the overall pharma and biotech sectors hold up today on news that hit after the bell around recent sector pariah Valeant Pharmaceuticals (NYSE:VRX). Optum, the health services platform of UnitedHealth (NYSE:UNH), as well as CVS Health (NYSE:CVS)and Express Scripts (NASDAQ:ESRX) announced they are cutting ties to Philidor, the specialty pharmacy linked to Valeant Pharmaceuticals. Valeant also just announced it would drop ties to Philidor as well. This is the latest piece of bad news for what was a hedge fund darling until a month or so ago.
Biotech has had a good month after stepping a toe in official bear market territory towards the end of September. This week the space has been helped by better than expected earnings reports from some of the large cap stocks in the sector such as Gilead Sciences (NASDAQ:GILD) and Amgen (NASDAQ:AMGN). Both of these companies easily beat on the top and the bottom lines as well as raised guidance. These companies continued ability to deliver solid results even in a globally challenged environment are why they are two of the “core” holdings within my Biotech Gems portfolio and paired with a dozen promising and less heavily weighted small and mid-cap positions.
The Pharma & Biotech sectors have also been helped this week by good earnings reports from Bristol Meyers Squibb (NYSE:BMY), Merck (NYSE:MRK) and Pfizer (NYSE:PFE). A possible merger between the latter and Allergan (NYSE:AGN) that hit the wires early Thursday also has been a positive for the sector late this week.
The news around Valeant could put these sectors under pressure once again into early next week at the least. Here is what I am watching for today from the continuing fallout from the ongoing saga at Valeant Pharmaceuticals.
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