Health-care shares capped a volatile session with losses Wednesday after a negative report about Canadian drug maker Valeant Pharmaceuticals International.
Short-selling firm Citron Research questioned whether Valeant is a “pharmaceutical Enron,” which sent the stock down as much as 40%, its largest ever intraday drop. Valeant released a statement calling the report “erroneous.”
U.S.-listed shares of Valeant rebounded from their lows to end with a loss of $28.13, or 19%, to $118.61. It was the most active stock on the New York Stock Exchange and more than 88 million shares changed hands, which is more than three times its previous record.
The S&P’s health-care sector fell 0.9%, while the Nasdaq Biotechnology Index slipped 0.5%. It was the latest knock on health-care shares, which have fallen 11% over the last three months, in part due to criticism of drug prices. That is a turnaround from recent years in which those stocks helped propel the market higher.
The move lower in health-care and biotech stocks Wednesday was driven by the Valeant report, said Sahak Manuelian, a managing director at Wedbush Securities. “When the Valeant news came out, everything in biotech turned lower,” he said.
In the bigger picture, however, increased access to health care and the aging baby-boomer population are likely to continue boosting the broader sector, said Art Hogan, chief market strategist at Wunderlich Securities.
“There may be bumps in the road for companies that are doing the more expensive drug development. But the general thesis behind health-care investing still remains,” he said.
Source: Reuters
