Drug Companies are Leaving - The drug companies have been leaving the U.S. as the campaign rhetoric becomes louder. In late November, Dublin-based Allergan (NYSE:AGN) said it was buying Pfizer (NYSE:PFE) in a $160 billion deal, although the combined company will be known as Pfizer Plc. U.S. President Barack Obama has called this type of deal, or inversion, unpatriotic. Pfizer's Chief Executive Officer Ian Read thinks differently as he put it, "the deal would help put the company on a more competitive footing." "The fact that Pfizer is leaving our country with a tremendous loss of jobs is disgusting," Trump said back then.
Democratic Candidates' Plans - Democratic U.S. Presidential candidates have been feeling increasing pressure to develop answers for the problem of high-cost prescription drugs. In October, Hillary Clinton proposed capping out-of-pocket drug expenses at $250 a month, reducing the exclusivity period to 7 years from its current 12 years, and requiring most drug makers to spend a defined portion of their profits on research and development. The Clinton plan wouldn't allow Medicare to negotiate prices of all drugs, but is limited to biologics and high-cost drugs, in line with the Obama budget proposal released earlier last year. Her rival, Senator Bernie Sanders, a Democratic Socialist, wants people to be able to buy low-cost drugs from Canada and to allow Medicare to negotiate prices with drug companies without limits.
Two weeks ago, another Dublin-based biopharmaceutical company, Shire (NASDAQ:SHPG) said it was acquiring an Illinois company, Baxalta Inc. (NYSE:BXLT), in a $32 billion deal to create the world's largest rare-disease drugmaker.
Since September 21, when Mrs. Clinton went on a Twitter frenzy and sent out a tweet about "outrageous" price gouging by a pharmaceutical CEO, the share price of IBB has plunged over 22%. About 42.75% of the holdings in the IBB index are the five big cap biotech companies, Celgene (NASDAQ:CELG), Amgen (NASDAQ:AMGN), Biogen (NASDAQ:BIIB), Gilead Sciences (NASDAQ:GILD) and Regeneron Pharmaceuticals (NASDAQ:REGN), with a combined market cap of over $438 billion.
IBB Technical Chart
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