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The Fund normally invests at least 80 percent of its total assets in securities that comprise the Funds benchmark index. The Pharmaceutical Index includes common stocks and depositary receipts of U.S. exchange-listed companies in the pharmaceutical industry. Such companies may include medium-capitalization companies and foreign companies that are listed on a U.S. exchange. To be initially eligible for the Pharmaceutical Index, companies must generate at least 50 percent of their revenues from pharmaceuticals. Pharmaceuticals include companies engaged primarily in research (including research contractors) and development as well as production, marketing and sales of pharmaceuticals (excluding pharmacies). Of the largest 50 stocks in the pharmaceutical industry by full market capitalization, the top 25 by free-float market capitalization (i.e., includes only shares that are readily available for trading in the market) and three month average daily trading volume are included in the Pharmaceutical Index.

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Trump quiere que las farmacéuticas vuelvan a EE. UU. ¿Cómo afectarán sus aranceles a las acciones del sector?

Trump presiona a farmacéuticas con aranceles para forzar regreso a EE. UU.

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As the drug industry is in the middle of a growing policy maelstrom in Washington, D.C., investors are <a href="https://www.benzinga.com/etfs">closely watching pharmaceutical ETFs</a> to measure market sentiment and ride out the emerging volatility. 
With President Donald Trump&#8217;s administration rehashing contentious ideas on drug pricing and manufacturing policy, the stakes are increasing — not only for Big Pharma, but for the overall healthcare investment environment.
Amid the trends, pharma-targeted ETFs are being watched under a more risk-averse lens. Each of the funds provides sector exposure, but structural idiosyncrasies — and varying levels of protection from regulation-induced shocks — are gaining heightened relevance.
<h1 class="wp-block-heading">Slicing Up The Pharma ETF Scene</h1>
iShares U.S. Pharmaceuticals ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IHE#NYSE">IHE</a>)
The ETF offers concentrated exposure to large-cap U.S.-listed pharma companies. Its top holdings are Johnson &amp; Johnson (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNJ#NYSE">JNJ</a>), Merck &amp; Co Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MRK#NYSE">MRK</a>), Eli Lilly And Co (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LLY#NYSE">LLY</a>), and Pfizer Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PFE#NYSE">PFE</a>) — companies with strong pipelines and international revenue streams.
Defensive Tilt: IHE&#8217;s emphasis on blue-chip names makes it a relatively defensive play during periods of political unrest.
Policy Sensitivity: But its large weighting in companies with substantial Medicaid and U.S. sales exposure renders it highly sensitive to pharmaceutical pricing reform in the domestic market.
SPDR S&amp;P Pharmaceuticals ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XPH#NYSE">XPH</a>)
Unlike IHE, the SPDR S&amp;P Pharmaceuticals ETF uses an equal-weighting style, dispersing exposure across a larger segment of the industry, including mid- and small-cap companies such as Viatris (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VTRS#NASDAQ">VTRS</a>).
Diversified Risk: This format caps overconcentration in a single name and increases sensitivity to prospective M&amp;A action.
Higher Volatility: As more importance is assigned to lesser-known participants, XPH can see greater price volatility, particularly as regulatory threats play out.
VanEck Pharmaceutical ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PPH#NASDAQ">PPH</a>)
Those in search of global exposure should look at PPH, which includes international powerhouses such as AstraZeneca (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AZN#NASDAQ">AZN</a>) and Novo Nordisk A/S (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVO#NYSE">NVO</a>) on par with U.S. behemoths.
Geopolitical Hedge: International diversification renders PPH less susceptible to U.S.-specific tariff risks or reforms.
Growth Exposure: Novo Nordisk&#8217;s dominance of GLP-1-based obesity treatment provides a high-growth component, although subject to some headwinds due to compounding alternatives in the U.S.
<h1 class="wp-block-heading">Volatility Ahead?</h1>
These ETF dynamics are unfolding against a backdrop of sweeping proposals and heightened industry-government tension. The Trump administration's <a href="https://www.benzinga.com/markets/25/04/44945973/trump-administration-considers-lowering-us-drug-prices-to-international-levels-report">revived push to tether Medicaid drug prices to lower international benchmarks</a> has sent shockwaves through the pharmaceutical sector. Industry analysts estimate the pricing framework could erase as much as $1 trillion in revenue over a decade, according to Bloomberg.
Surprised by the White House&#8217;s latest move, drug industry executives have mounted a concerted lobbying effort, trying to keep the policy from taking hold in Congress. Although some Republican lawmakers, including Kentucky Rep. Brett Guthrie, have reaffirmed their opposition to global reference pricing, the proposal is still a live political threat, Bloomberg reported.
And adding to investor anxiety is Trump&#8217;s latest threat of<a href="https://www.benzinga.com/25/04/44708204/trump-hints-at-major-tariff-on-imported-pharmaceuticals-us-pharma-stocks-tumble-in-wednesday-pre-market"> sector-specific tariffs on drugs</a>. Although the Department of Commerce&#8217;s Section 232 investigation can take months, the threat of new import tariffs — particularly on Indian generics and contract-manufactured products — has already spilled over into related stocks. Insiders within the industry say the administration might move while there is a 90-day moratorium on reciprocal tariff imposition.
Not all of Washington&#8217;s signals are bearish, though. A recently signed executive order is intended to <a href="https://www.benzinga.com/government/regulations/25/05/45215281/trump-orders-fda-to-fast-track-us-drug-production-as-tariff-threat-looms-on-imported-medicines-cites-national-security-concerns">lower FDA approval times for U.S. manufacturing plants</a> — potentially speeding up reshoring and encouraging investment in U.S.-based production. For more exposed domestic manufacturers and smaller company-focused ETFs such as XPH, this may be a long-term tailwind.
<h1 class="wp-block-heading">Proceed, But With Prescription-Strength Caution</h1>
For those looking for exposure to the pharma industry, ETFs are still an important tool — but their variations are more important than ever.
IHE provides stability but is heavily influenced by the success of U.S. policy.
XPH offers balanced exposure and is potentially more sensitive to reforms in domestic manufacturing.
PPH offers a global cushion, especially useful if U.S.-focused risks increase.
In the end, pharma ETFs&#8217; future may depend less on laboratory discoveries than on the political medicine doled out by Washington. 
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/etfs/new-etfs/25/05/45259802/vistashares-launches-qusa-etf-targeting-15-annual-yield-with-quality-us-stocks-options-overlay">VistaShares Launches QUSA ETF, Targeting 15% Annual Yield With Quality U.S. Stocks, Options Overlay</a></li>
</ul>
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Are Your Health Care ETFs Safe? Trump's New Policies May Trigger Shockwaves Across Pharma Stocks

Even as President Donald Trump paused the reciprocal tariffs for 90 days on Wednesday, he later confirmed in a conversation with reporters at his Oval Office that pharmaceutical companies would face tariffs.
What Happened: The rally in pharma stocks was short-lived after the stocks reversed course on Thursday. When a reporter asked President Trump if he would go ahead and levy tariff duties on pharmaceutical stocks, he said, &#8220;Yeah, well, I will be because we want them coming back.&#8221;
&#8220;You know, we realized during COVID-19 that we don&#8217;t make our drugs and our pharmaceuticals in this country. So, I realized that, and it was a big realization,&#8221; he added.
Citing the emergency during COVID-19, he stated that he wanted the pharma companies to produce drugs in the U.S.
&#8220;We had to go to China to get drugs, we had to go to other places, we don&#8217;t make it. That&#8217;s because we let them leave, and now if they want to come back, we&#8217;re going to put tariffs on the pharmaceutical companies, and they&#8217;re going to all want to come back,&#8221; Trump said.
The pharma stocks tumbled on Thursday after Trump&#8217;s confirmation of tariffs.
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Pharma Stocks</td>
<td>Thursday&#8217;s Performance</td>
<td>YTD Performance</td>
<td>One Year Performance</td>
</tr>
<tr>
<td>Eli Lilly And Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LLY#NYSE">LLY</a>)</td>
<td>-4.35%</td>
<td>-7.35%</td>
<td>-5.09%</td>
</tr>
<tr>
<td>AbbVie Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ABBV#NYSE">ABBV</a>)</td>
<td>-3.14%</td>
<td>-2.92%</td>
<td>3.99%</td>
</tr>
<tr>
<td>Bristol-Myers Squibb Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BMY#NYSE">BMY</a>)</td>
<td>-6.10%</td>
<td>-11.15%</td>
<td>2.73%</td>
</tr>
<tr>
<td>Regeneron Pharmaceuticals Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/REGN#NASDAQ">REGN</a>)</td>
<td>-5.26%</td>
<td>-23.60%</td>
<td>-40.63%</td>
</tr>
<tr>
<td>Pfizer Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PFE#NYSE">PFE</a>)</td>
<td>-3.87%</td>
<td>-18.87%</td>
<td>-18.03%</td>
</tr>
<tr>
<td>Gilead Sciences Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GILD#NASDAQ">GILD</a>)</td>
<td>-3.66%</td>
<td>10.36%</td>
<td>47.71%</td>
</tr>
<tr>
<td>Merck &amp; Co Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MRK#NYSE">MRK</a>)</td>
<td>-5.32%</td>
<td>-21.80%</td>
<td>-38.53%</td>
</tr>
<tr>
<td>Amgen Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMGN#NASDAQ">AMGN</a>)</td>
<td>-3.33%</td>
<td>8.54%</td>
<td>4.23%</td>
</tr>
<tr>
<td>Johnson &amp; Johnson (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNJ#NYSE">JNJ</a>)</td>
<td>-1.51%</td>
<td>3.24%</td>
<td>-0.07%</td>
</tr>
</tbody>
</table>
</figure>
See Also: <a href="https://www.benzinga.com/markets/equities/25/04/44755181/pentagon-slashes-5-1-billion-in-accenture-deloitte-booz-allen-contracts-thats-a-lot-of-consulting">Pentagon Slashes $5.1 Billion In Accenture, Deloitte, Booz Allen Contracts: &#8216;That&#8217;s A Lot Of Consulting&#8217;</a>
Why It Matters: Despite a 90-day pause on reciprocal tariffs, base global tariffs of 10% and China tariffs of 125%, along with sector-specific tariffs of 25% on steel and aluminum, auto, and auto parts remain in place. Adding to it, the President hinted that he could soon announce tariffs on pharmaceutical companies.
Here are some of the pharmaceutical industry-linked exchange-traded funds that could be impacted.
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Pharma ETFs</td>
<td>YTD Performance</td>
<td>One Year Performance</td>
</tr>
<tr>
<td>VanEck Pharmaceutical ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PPH#NASDAQ">PPH</a>)</td>
<td>-7.02%</td>
<td>-7.51%</td>
</tr>
<tr>
<td>iShares US Pharmaceuticals ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IHE#NYSE">IHE</a>)</td>
<td>-7.04%</td>
<td>-6.08%</td>
</tr>
<tr>
<td>Invesco Pharmaceuticals ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PJP#NYSE">PJP</a>)</td>
<td>-10.13%</td>
<td>-4.37%</td>
</tr>
<tr>
<td>SPDR S&amp;P Pharmaceuticals ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XPH#NYSE">XPH</a>)</td>
<td>-14.05%</td>
<td>-11.45%</td>
</tr>
<tr>
<td>KraneShares MSCI All China Health Care Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KURE#NYSE">KURE</a>)</td>
<td>2.88%</td>
<td>0.35%</td>
</tr>
<tr>
<td>First Trust Nasdaq Pharmaceuticals ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FTXH#NASDAQ">FTXH</a>)</td>
<td>-11.54%</td>
<td>-10.18%</td>
</tr>
<tr>
<td>Direxion Daily Pharmaceutical &amp; Medical (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PILL#NYSE">PILL</a>)</td>
<td>-41.35%</td>
<td>-43.86%</td>
</tr>
</tbody>
</table>
</figure>
Price Action: After Thursday&#8217;s fall, following Wednesday&#8217;s rebound, the Nasdaq 100 index was 17.46% lower than its previous high of 22,222.61 points. The S&amp;P 500 index was down 14.31% from its record of 6,147.43 points, and the Dow Jones declined 12.16% from its 52-week high of 45,073.63 points.
The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and Invesco QQQ Trust ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), which track the S&amp;P 500 index and Nasdaq 100 index, respectively, ended lower on Thursday. The SPY was down 4.38% to $524.58, while the QQQ declined 4.25% to $446.18, according to <a href="https://pro.benzinga.com/dashboard">Benzinga Pro</a> data.
Read Next:
<ul>
<li><a href="https://www.benzinga.com/government/regulations/25/04/44728276/spy-qqq-call-volumes-spiked-minutes-before-tariff-pause-announcement-alexandria-ocasio-cortez-demands-disclosure-from-congress-members" target="_blank" rel="noreferrer noopener">SPY, QQQ Call Volumes Spiked Minutes Before Tariff Pause Announcement: Alexandria Ocasio-Cortez Demands Disclosure From Congress Members</a></li>
</ul>
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Eli Lilly, AbbVie, Bristol Myers, Regeneron, And Other Pharma Companies Slide As Donald Trump Confirms Tariffs On Pharma Companies

The second-quarter results of the healthcare sector have been impressive, with earnings of 78.8% of the sector participants that have reported so far up 17.1% on 7.6% revenue growth. The earnings beat ratio of 85.7% and the revenue beat ratio of 75.5% are also assuring. Combining the actual results with the estimates for the still-to-report companies, the total earnings of the sector are expected to grow 16.6% on revenue growth of 8.5%.
Many industry bigwigs reported solid results, with some beating on earnings or revenues or both. However, the recent market rout has eroded some gains from the sector. As such, pharma ETFs have delivered mixed performances over the past month. iShares U.S. Pharmaceuticals ETF (ARCA:IHE), VanEck Vectors Pharmaceutical ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pph#NASDAQ">PPH</a>), SPDR S&amp;P Pharmaceuticals ETF (ARCA:XPH) and First Trust Nasdaq Pharmaceuticals ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/ftxh#NASDAQ">FTXH</a>) have gained 0.3%, 1.1%, 0.07%, and 0.4% respectively, while Invesco Pharmaceuticals ETF (ARCA:PJP) has shed 0.1% in a month.
Let&#39;s delve deeper into the earnings of some of the bigwigs:
<h3>Earnings in Focus</h3>
Johnson and Johnson 
Johnson &amp; Johnson (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnj#NYSE">JNJ</a>) continued with its long streak of earnings beat and also outpaced revenue estimates. Earnings per share came in at $2.82, beating the Zacks Consensus Estimate of $2.71 and improving 10.2% from the year-ago quarter. Revenues grew 4.3% year over year to $22.45 billion and fell short of the Zacks Consensus Estimate of $22.38 billion. For 2024, Johnson &amp; Johnson maintained its revenue guidance of $88-$88.4 billion, indicating year-over-year growth of 4.7%-5.2%. It lowered adjusted earnings per share guidance from $10.57-$10.72 to $9.97-$10.07. 
Pfizer 
Pfizer (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pfe#NYSE">PFE</a>) topped estimates on both the top and bottom lines. It reported adjusted earnings per share of 60 cents, which beat the Zacks Consensus Estimate of 45 cents per share but declined 11% year over year. Revenues inched up 2% year over year to $13.28 billion and edged past the consensus mark of $13.13 billion. The U.S. drug giant raised its revenue guidance from $58.5-$61.5 billion to $59.5-$62.5 billion and adjusted earnings per share from $2.15-$2.35 to $2.45-$2.65 for 2024. 
Merck 
Merck (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mrk#NYSE">MRK</a>) also topped earnings and revenue estimates. It posted earnings per share of $2.28, which surpassed the Zacks Consensus Estimate of $2.16. In the year-ago period, the company had incurred an adjusted loss of $2.06 per share. Revenues rose 79% year over year to $16.11 billion and edged past the consensus mark of $15.90 billion. Merck lifted the higher end of its revenue guidance from $63.1-$64.3 billion to $63.1-$64.4 billion but lowered the earnings per share guidance to $7.94-$8.04 from $8.53-$8.65. 
Bristol-Myers 
Bristol-Myers (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bmy#NYSE">BMY</a>) also reported better-than-expected results. It posted an earnings per share of $2.07, outpacing the Zacks Consensus Estimate of $1.64. Earnings came in higher than the year-ago earnings of $1.75. Revenues grew 9% year over year to $12.2 billion and edged past the Zacks Consensus Estimate of $11.5 billion. For 2024, Bristol-Myers now expects revenues to increase in the upper end of the low single-digit range versus the previous guidance of low single digits.&nbsp; It lifted its earnings per share guidance to 60-90 cents from 40-70 cents. 
Eli Lilly and Company 
Eli Lilly and Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lly#NYSE">LLY</a>) reported robust second-quarter 2024, beating earnings and revenue estimates. Earnings per share came in at $3.92, surpassing the Zacks Consensus Estimate of $2.64 and improving 86% from the year-ago number. Revenues rose 36% to $11.3 billion and edged past the estimated $9.83 billion. Eli Lilly increased its full-year outlook for the second time this year. It raised the revenue guidance to $45.4-$46.6 billion from $42.4-$43.6 billion and the adjusted earnings per share guidance to $16.10-$16.60 from $13.50-$14.00.
<h3>ETF Angle</h3>
iShares U.S. Pharmaceuticals ETF
iShares U.S. Pharmaceuticals ETF provides exposure to 36 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus five firms are the top holdings in the basket, accounting for a combined 59.4% of the total assets, suggesting heavy concentration. iShares U.S. Pharmaceuticals ETF has $670.8 million in AUM and charges 39 bps in fees and expenses. It carries a Zacks ETF Rank #3 (Hold) with a High risk outlook. 
VanEck Vectors Pharmaceutical ETF
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. The five firms collectively account for a 33.6% share in the fund&#39;s basket. The product has amassed $678.1 million in its asset base and charges 36 bps in annual fees. VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
SPDR S&amp;P Pharmaceuticals ETF
SPDR S&amp;P Pharmaceuticals ETF provides exposure to pharma companies by tracking the S&amp;P Pharmaceuticals Select Industry Index. With AUM of $177.9 million, it holds 43 securities, with the in-focus firms making up about 4% share each. SPDR S&amp;P Pharmaceuticals ETF charges 35 bps in fees a year and has a Zacks ETF Rank #3 with a High risk outlook.
Invesco Pharmaceuticals ETF
Invesco Pharmaceuticals ETF offers exposure to companies that are principally engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceuticals Intellidex Index and holds 23 stocks in its basket, with the in-focus firms making up at least 5% share each. Invesco Pharmaceuticals ETF has AUM of about $283.8 million and charges 57 bps in fees and expenses. The ETF has a Zacks ETF Rank #3 with a High risk outlook.
First Trust Nasdaq Pharmaceuticals ETF
First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 50 securities in its basket. The in-focus five firms account for a combined 31.4% of the assets. FTXH has AUM of $18.3 million. First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.
<a href="https://www.zacks.com/stock/news/2322190/pharma-etfs-in-focus-post-solid-q2-earnings?cid=CS-BENZ-FT-etf_news_and_commentary-2322190">To read this article on Zacks.com click here.</a>

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Pharma ETFs in Focus Post Solid Q2 Earnings

Pharmaceutical giant Novo Nordisk A/S (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVO#NYSE">NVO</a>) is reportedly set to overtake Denmark&#8217;s iconic toymaker, Lego A/S, as the nation&#8217;s most valuable brand.
For now, Lego continues to hold the title of the nation&#8217;s most valuable brand, a position it has maintained for nine consecutive years.
However, the pharmaceutical giant is rapidly gaining ground, thanks to the surging popularity of its weight-loss drugs on a global scale.
Lego&#8217;s brand value has modestly increased by 3% in the past year, reaching approximately $8 billion. In contrast, Novo Nordisk&#8217;s brand value soared by 59% to $5.1 billion, reported <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-06-12/novo-nordisk-threatens-lego-s-position-as-denmark-s-no-1-brand?srnd=industries-v2&amp;sref=TBDibEcD" rel="noreferrer noopener">Bloomberg</a>, citing the latest 2024 country rankings by Brand Finance, released on Wednesday.
Novo Nordisk&#8217;s meteoric rise in brand value is largely attributed to the explosive demand for its weight-loss medications, Ozempic and Wegovy.
Also Read: <a target="_blank" href="https://www.benzinga.com/general/biotech/24/06/39228433/ozempic-wegovy-create-domino-effect-as-new-products-emerge-across-industries-to-capture-new-consu" rel="noreferrer noopener">Ozempic, Wegovy Create Domino Effect As New Products Emerge Across Industries To Capture New Consumer Habits</a>
These products have not only dominated the market but also become cultural phenomena, significantly enhancing Novo&#8217;s brand presence worldwide.
The success of Novo Nordisk has profound implications for Denmark&#8217;s economy. As Europe&#8217;s most valuable company by market value, Novo&#8217;s growth has been vital, influencing everything from interest rates to employment levels in Denmark.
In 2023, Denmark&#8217;s GDP growth was reported at 1.9%, a figure that would have been negligible without Novo&#8217;s contributions, per the report.
Despite their success, both Danish giants still trail far behind the global leader, Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), whose brand is valued at a staggering $517 billion, making it the world&#8217;s most valuable, per Brand Finance, noted the report.
Novo Nordisk stock has gained more than 80% in the last 12 months. Investors can gain exposure to the stock via VanEck Pharmaceutical ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PPH#NASDAQ">PPH</a>) and First Trust International Equity Opportunities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FPXI#NASDAQ">FPXI</a>)
Price Action: NVO shares are trading higher by 0.82% at $142.95 at the last check Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Read Next: <a href="https://www.benzinga.com/general/biotech/24/05/39117961/novo-nordisk-sues-additional-us-clinics-against-fake-semaglutide-products-used-for-weight-loss-di" target="_blank" rel="noreferrer noopener">Novo Nordisk Sues Additional US Clinics Against Fake Semaglutide Products Used For Weight Loss, Diabetes</a>
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FPXI

Ozempic Maker Novo Nordisk Closes In On Lego As Denmark's Most Valuable Brand: Report

The first-quarter results of the healthcare sector have been unimpressive, with earnings of 78% of the sector participants that have reported so far down 31.2% despite 4.4% revenue growth. The earnings beat ratio of 93.9% and the revenue beat ratio of 75.8% are assuring, though. Combining the actual results with the estimates for the still-to-report companies, the total earnings of the sector are expected to decline 25.1% despite revenue growth of 7.1%. 
However, many industry bigwigs reported solid results, with some beating on earnings or revenues or both. As such, pharma ETFs have delivered mixed performances over the past month. iShares U.S. Pharmaceuticals ETF (ARCA:IHE), VanEck Vectors Pharmaceutical ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pph#NASDAQ">PPH</a>), SPDR S&amp;P Pharmaceuticals ETF (ARCA:XPH) and First Trust Nasdaq Pharmaceuticals ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/ftxh#NASDAQ">FTXH</a>) have lost 3.7%,1.9%, 2.9%, and 3.1% respectively, while Invesco Pharmaceuticals ETF (ARCA:PJP) has added 0.8% in a month. 
Let&#39;s delve deeper into the earnings of some of the bigwigs:
<h3>Earnings in Focus</h3>
Johnson and Johnson 
Johnson &amp; Johnson (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnj#NYSE">JNJ</a>) continued with its long streak of earnings beat but lagged revenue estimates. Earnings per share came in at $2.71, beating the Zacks Consensus Estimate of $2.64 and improving 12.4% from the year-ago quarter. Revenues grew 2% year over year to $21.38 billion and fell short of the Zacks Consensus Estimate of $21.4 billion. For 2024, Johnson &amp; Johnson revised its guidance from $88.2-$89.0 billion to $87.8-$88.6 billion, indicating year-over-year growth of 5.5%-6.0%. The adjusted earnings per share guidance was tightened from $10.55-$10.75 to $10.57 to $10.72. 
Pfizer 
Pfizer (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pfe#NYSE">PFE</a>) topped estimates on both the top and bottom lines. It reported adjusted earnings per share of 82 cents, which beat the Zacks Consensus Estimate of 56 cents per share but declined 33% year over year. Revenues declined 20% year over year to $14.88 billion and fell short of the consensus mark of $13.96 billion. The U.S. drug giant reaffirmed its revenue guidance of $58.5-$61.5 billion and raised its adjusted earnings per share to $2.15-$2.35 from $2.05-$2.25 for 2024. 
Merck 
Merck (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mrk#NYSE">MRK</a>) also topped earnings and revenue estimates. It posted earnings per share of $2.07, which surpassed the Zacks Consensus Estimate of $1.94 and increased 48% from the year-ago earnings. Revenues rose 9% year over year to $15.78 billion and edged past the consensus mark of $15.37 billion. Merck lifted the lower end of its revenue guidance. It now expects revenues in the range of $63.1-$64.2 billion from $62.7-$64.2 billion, while earnings per share are expected in the range of $8.53-$8.65 versus the prior expectation of $8.44-$8.59. 
Bristol-Myers 
Bristol-Myers (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bmy#NYSE">BMY</a>) also reported better-than-expected results. It posted a loss per share of $4.40, narrower than the Zacks Consensus Estimate of a loss of $4.53 per share. In the year-ago quarter, BMY posted adjusted earnings per share of $2.05. Revenues grew 5% year over year to $11.86 billion and edged past the Zacks Consensus Estimate of $11.46 billion. For 2024, Bristol-Myers expects revenues to increase in the low single digits while earnings per share are expected in the band of 40 cents to 70 cents, down from the earlier estimate of $7.10-$7.40, to reflect the dilutive impact of recent acquisitions and collaborations. 
Eli Lilly and Company 
Eli Lilly and Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lly#NYSE">LLY</a>) posted mixed first-quarter 2024 earnings, beating earnings estimates but lagging on revenues. Earnings per share came in at $2.58, surpassing the Zacks Consensus Estimate of $2.53 and improving 59% from the year-ago number. Revenues rose 26% to $8.77 billion but fell short of the estimated $8.81 billion. Eli Lilly raised the 2024 revenue guidance to $42.4-$43.6 billion from $40.4-$41.6 billion, while the adjusted earnings per share guidance was upped to $13.50-$14.00 from the prior projection of $12.20-$12.70.
<h3>ETF Angle</h3>
iShares U.S. Pharmaceuticals ETF 
iShares U.S. Pharmaceuticals ETF provides exposure to 34 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus five firms are the top holdings in the basket, accounting for a combined 59% of the total assets, suggesting heavy concentration. iShares U.S. Pharmaceuticals ETF has $654.8 million in AUM and charges 40 bps in fees and expenses. It carries a Zacks ETF Rank #2 (Buy) with a High risk outlook. 
VanEck Vectors Pharmaceutical ETF 
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. The five firms collectively account for a 33.2% share in the fund&#39;s basket. The product has amassed $512.7 million in its asset base and charges 36 bps in annual fees. VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. 
SPDR S&amp;P Pharmaceuticals ETF 
SPDR S&amp;P Pharmaceuticals ETF provides exposure to pharma companies by tracking the S&amp;P Pharmaceuticals Select Industry Index. With AUM of $197.9 million, it holds 41 securities, with the in-focus firms making up about 4% share each. SPDR S&amp;P Pharmaceuticals ETF charges 35 bps in fees a year and has a Zacks ETF Rank #3 with a High risk outlook. 
Invesco Pharmaceuticals ETF 
Invesco Pharmaceuticals ETF offers exposure to companies that are principally engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceuticals Intellidex Index and holds 24 stocks in its basket, with the in-focus firms making up at least 5% share each. Invesco Pharmaceuticals ETF has AUM of about $270.2 million and charges 57 bps in fees and expenses. The ETF has a Zacks ETF Rank #3 with a High risk outlook. 
First Trust Nasdaq Pharmaceuticals ETF 
First Trust Nasdaq Pharmaceuticals ETF tracks the Nasdaq US Smart Pharmaceuticals Index, holding 50 securities in its basket. The in-focus five firms account for a combined 32.2% of the assets. FTXH has AUM of $19.9 million. First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #2 (Buy).
<a href="https://www.zacks.com/stock/news/2269782/a-look-at-pharma-etfs-post-q1-earnings?cid=CS-BENZ-FT-etf_news_and_commentary-2269782">To read this article on Zacks.com click here.</a>

A Look at Pharma ETFs Post Q1 Earnings

Novo Nordisk A/S (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVO#NYSE">NVO</a>)&#8217;s Wegovy garnered the Food and Drug Administration&#8217;s approval for expanded use Friday, marking what the drugmaker said is a pivotal turn in the treatment landscape for individuals grappling with the dual challenges of obesity and established <a href="https://www.benzinga.com/general/health-care">cardiovascular disease</a>.
This approval underscores a new era in preventive health strategies, targeting a significant reduction in major adverse cardiovascular events (MACE), including cardiovascular death, non-fatal heart attacks (myocardial infarction) and nonfatal strokes.
Leap Forward In Cardiovascular, Weight Management Therapy
The FDA&#8217;s green light is anchored in the evidence from the SELECT cardiovascular outcomes trial. This study puts forth an argument for Wegovy&#8217;s efficacy, showcasing a statistically significant 20% reduction in the risk of MACE compared to placebo, all while integrated into the standard care regimen. 
&#8220;We are very pleased that Wegovy is now approved in the U.S. as the first therapy to help people manage their weight and reduce cardiovascular risks,&#8221; Martin Holst Lange, executive vice president and head of development at Novo Nordisk, said in a statement. 
Lange added the authorization marks a significant breakthrough for individuals battling obesity and cardiovascular disease, highlighting the potential of Wegovy to extend life expectancy.
Novo Nordisk has widened its ambition into the European Union, where it is seeking a similar label expansion. 
Shares of Novo Nordisk were 1.9% lower on Friday, but trimmed some losses after the news release. The Danish pharma giant&#8217;s stock has risen by 90% over the last year. 
The exchange-traded fund holding the largest allocation of Novo Nordisk&#8217;s shares is the VanEck Pharmaceuticals ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PPH#NYSE">PPH</a>), with the Danish company comprising nearly 9% of its portfolio.
Read now: <a href="https://www.benzinga.com/insights/news/24/03/37562337/in-depth-analysis-eli-lilly-and-co-versus-competitors-in-pharmaceuticals-industry">In-Depth Analysis: Eli Lilly and Co Versus Competitors In Pharmaceuticals Industry</a>
Photo via Shutterstock.

Biotech

Regulations

Novo Nordisk's Game-Changer: FDA Approves Weight Loss Sensation Wegovy For Heart Health, Potential Insurance Coverage

While many of the world&#8217;s investors remain focused on "<a href="https://www.benzinga.com/markets/equities/24/02/36897355/what-are-the-magnificent-7-stocks-why-do-they-dominate-the-market">The Magnificent Seven</a>" — a group of tech stocks that significantly outperformed in 2023 — a small group of European stocks has quietly outperformed most of the world. 
Based on the first letters of their names, Goldman Sachs dubbed this group &#8220;Granolas,&#8221; and it accounted for 50% of gains of the Stoxx Europe 600 Index for the past year.
<h3 class="wp-block-heading">Who are the Granolas?</h3>
Granolas refers to a group of 11 European stocks operating in the healthcare and pharmaceutical sector, with an addition of luxury, consumer staples, industrial manufacturing and software technology. They include:
<ul>
<li>GSK plc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GSK#NYSE">GSK</a>): The pharmaceutical company, founded in 1715, operates through four segments: Pharmaceuticals, Pharmaceuticals R&amp;D, Vaccines, and Consumer Healthcare. The company's arguably most famous product is pain reliever Advil. Its stock trades at 13.8x the earnings — below the industry's average. It pays a 3.5% dividend with a reasonable 48% payout ratio. One potential weakness is its high level of debt, which grew during the COVID-19 pandemic but has been improving over the last two years.</li>
</ul>
<ul>
<li>Roche Holding AG (OTCQX:<a class="ticker" href="https://www.benzinga.com/stock/RHHBY#OTCQX">RHHBY</a>): The Swiss pharmaceutical giant touts over 100,000 employees and has a broad portfolio of products, including in vitro tests for various diseases such as cancer, diabetes, COVID-19 and others. It boasts a healthy 19% profit margin and a price-to-earnings ratio 16.1x, which is well below the industry average. The company, founded in 1896, pays a stable and growing 4.1% dividend with a reasonable 67% payout ratio. Its debt-to-equity ratio has doubled from 40% in 2019 to over 80% in the aftermath of the COVID-19 Pandemic.</li>
</ul>
<ul>
<li>ASML Holding N.V. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ASML#NASDAQ">ASML</a>): Dutch developer, producer and seller of advanced semiconductor equipment systems for chipmakers. It is a key company in the global semiconductor supply chain and the only company capable of supplying extreme ultraviolet lithography technology. This technology is crucial for producing the most advanced microchips with nodes as small as 7,5 or 3 nanometers. A single machine costs more than $200 million. Its stock trades at 43.4x its earnings. The company has a net profit margin of over 28% but pays a minuscule dividend of 0.7%. It has an excellent balance sheet, with cash exceeding the debt by almost 50% and a forecasted annual growth of 15.6%.</li>
</ul>
<ul>
<li>Nestlé S.A. (OTCPK:NSRGY): The food and beverage conglomerate has over 270,000 employees and operates household brands such as Nescafe, Nespresso, Maggi, Thomy and Hot Pockets. Its stock trades at 22.3x, above the European average for that industry, but expected given the company's status. Its net profit margin is hovering around 12%, and its sustainable 3.1% dividend has been stable. However, the company has doubled its debt over the last ten years and it currently amounts to almost $60 billion.</li>
</ul>
<ul>
<li>Novo Nordisk (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVO#NYSE">NVO</a>): Danish global pharmaceutical company specializing in diabetes and obesity care and rare diseases. The company's most famous product is Ozempic, a diabetes treatment that has gained popularity as a <a href="https://www.benzinga.com/general/biotech/24/02/37284940/obesity-solutions-like-weight-loss-drugs-to-act-as-catalyst-for-economic-surge-goldman-sachs-fore">weight loss drug</a>. Ozempic alone generated almost $14 billion in revenues in 2023, three times more than its second-best product, Wegovy. The stock trades around 45x its earnings, with a solid net profit margin of 36%. The company also pays a 1.1% dividend, which is below the industry average. However, its balance sheet is pristine, with comfortably more cash than debt and growth prospects of around 13%.</li>
</ul>
<ul>
<li>Novartis (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVS#NYSE">NVS</a>): In 2023, the company generated $45.5 billion in revenues, mainly from the U.S. ($18 billion) and Europe ($13 billion). Its products include Cosentyx, cardiovascular drug Entresto and Piqray, a cancer-treating drug. The stock trades at 24.8x its earnings, with a net profit margin of 18.3%. It pays a notable 3.6% dividend, but the payout ratio has been stretched to 95%. Novartis carries $24.6 billion of debt, but it is not a concerning sum, given the company&#8217;s size. </li>
</ul>
<ul>
<li>L&#8217;Oréal S.A. (OTCPK:LRLCY): French manufacturer and seller of cosmetic products. Often considered the world's most valuable cosmetics brand, under its umbrella it operates brands such as Maybelline New York, Garnier, NYX Professional Makeup, CeraVe, and Redken. The stock trades at 38.9x its earnings with a net profit margin of 15%. Its 1.5% dividend is not notable but boasts a low payout ratio, stability and comfortable growth potential. The balance sheet is strong, with a debt-to-equity ratio of less than 10%, indicating conservative risk practices.</li>
</ul>
<ul>
<li>LVMH Moët Hennessy &#8211; Louis Vuitton Société Européenne (OTCPK:LVMHF): French-based, globally-operating luxury goods company owns iconic brands like Louis Vuitton, Tiffany &amp; Co., Christian Dior, Fendi, Givenchy, Princess Yachts, TAG Heuer, Hublot, Dom Pérignon, Hennessy and many others. Its CEO, Bernard Arnault is the wealthiest person in the world <a href="https://www.forbes.com/sites/forbeswealthteam/article/the-top-ten-richest-people-in-the-world/">per</a> Forbes' 2024 list. The stock trades at 28x its earnings with a 17.61% net profit margin. The company pays a 1.5% dividend, which is the industry average, but owing to a low payout ratio there is plenty of room for growth. The balance sheet is very strong, with some debt in the aftermath of 2020, but it is not notable given the company's size.</li>
</ul>
<ul>
<li>AstraZeneca PLC (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AZN#NASDAQ">AZN</a>): The UK-based biopharmaceutical company developed the Oxford- AstraZeneca COVID-19 vaccine, sold under brand names Vovishield and Vaxzevria. The stock trades at 33.8x its earnings with a net profit margin of 13%. A 2.2% dividend is below the industry average but has sustained steady growth over the last decade. In 2021, the company took on almost $10 billion of debt, which remains a burden on the balance sheet, although some of it has already been paid off.</li>
</ul>
<ul>
<li>Sanofi (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SNY#NASDAQ">SNY</a>): French-based healthcare company focusing on neurology, immunology, rare diseases, oncology, rare blood disorders and cardiovascular diseases. Its most famous product is DUPIXENT (Dupilumab), a drug used for atopic dermatitis and asthma. The company trades at 20.6x its earnings with a net profit margin of 11.7%. A dividend is Sanofi's strong side, paying 4.2% with a track record of stability and growth. The balance sheet is strong, with debt decreasing, equity rising and comfortable levels of cash and short-term investments.</li>
</ul>
<ul>
<li>SAP SE (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SAP#NYSE">SAP</a>): The German enterprise application software provider is a global leader in enterprise resource planning (ERP) software and the largest non-American software company by revenue. It trades at 53.9x its earnings, the highest valuation from the GRANOLAS list. The company has a 12% profit margin and pays an unimpressive 1.2% dividend. It boasts a strong balance sheet with more cash than total debt, indicating management's conservative approach to risk.</li>
</ul>
<h3 class="wp-block-heading">Granolas vs. The Magnificent Seven</h3>
There are three main advantages these stocks hold over The Magnificent Seven.
<ol>
<li>Low Volatility: These stocks are not as volatile as The Magnificent Seven, and they achieve similar results. Investors can compare these two groups by measuring the stock's average <a href="https://www.benzinga.com/money/how-to-calculate-beta">Beta</a>, a measure of volatility compared to the underlying market index. Another popular metric to show the impact of such investments is the Sharpe ratio. It&#8217;s one of the most widely used metrics for <a href="https://www.benzinga.com/money/understanding-risk-adjusted-return">measuring risk-adjusted return</a>.</li>
<li>Lower Valuation Multiple: The lower valuation of European stocks is noteworthy. On average, their price-to-earnings ratio is around 30. For the Magnificent Seven, this is over 46x as of March 2024.</li>
<li>Higher Dividend Yield: The Magnificent Seven are not known for their yield. Only three stocks of the group pay a dividend, with the highest one (Apple) yielding a paltry 0.5%. On the other hand, every single GRANOLAS stock pays a dividend, averaging a 2.42% yield. Combined with lower volatility, this fact makes them particularly attractive to long-term yield-oriented investors.</li>
</ol>
<h3 class="wp-block-heading">Investing In Granolas Via ETFs</h3>
Although many of the Granola stocks trade on U.S. exchanges, domestic investors might consider the VanEck Pharmaceutical ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PPH#NASDAQ">PPH</a>), which invests in the largest pharmaceutical companies.
Pacer Trendpilot European Index ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/PTEU#BATS">PTEU</a>) is another option. It is biased toward large-cap Eurozone equities, with 3/5 top holdings in GRANOLAS.
European investors should opt for iShares Core EURO STOXX 50 ETF. It offers over 40% of portfolio exposure to Granolas, or SPDR MSCI Europe Health Care UCITS ETF, which focuses on European healthcare industry.
Now Read: <a href="https://www.benzinga.com/news/large-cap/24/02/37287732/gold-miner-newmont-looks-to-sell-assets-reduce-8b-debt-load">Gold Miner Newmont Looks To Sell Assets, Reduce $8B Debt Load</a>
Image: Shutterstock

Eurozone

ASML

LRLCY

LVMHF

Nestle Sponsored representing Registered Shares Series B

NSRGY

PTEU

RHHBY

11 'Granolas' Stocks Outperform Magnificent 7 With Lower Volatility, Higher Yields

Politics

Biden-Harris Administration Moves Forward with Medicare Drug Price Negotiations to Lower Prescription Drug Costs for People with Medicare

After scuffling amid political uncertainty leading up to Election Day, pharmaceutical stocks and exchange-traded funds are finally perking amid a spate of encouraging news regarding coronavirus vaccine progress.
What Happened: The VanEck Vectors Pharmaceutical ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pph#NASDAQ">PPH</a>), which tracks the US Listed Pharmaceutical 25 Index, is a prime example of recent pharmaceutical equity ebullience. The $261 million PPH is a focused ETF <a href="https://www.vaneck.com/etf/equity/pph/overview/">with just 25 holdings</a>, but the fund is nonetheless levered to the vaccine competition.
For example, AstraZeneca (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/azn#NYSE">AZN</a>) and Pfizer (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pfe#NYSE">PFE</a>) combine for 9.60% of the VanEck fund&#39;s roster.
Why It&#39;s Important: The vaccine is an obvious catalyst for funds such as PPH, particularly with companies such as Pfizer and Moderna (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mrna#NASDAQ">MRNA</a>) reporting efficacy rates of 95%. However, there&#39;s more to the story with PPH and that should be enticing for investors.
&ldquo;The possibility of a divided U.S. Congress may further propel the pharmaceutical sector, benefiting pharmaceutical ETFs,&rdquo; <a href="https://www.vaneck.com/blogs/thematic-investing/pharma-sector-steps-up-as-a-portfolio-prescription/">according to a VanEck research note</a>. &ldquo;Although both Democrats and Republicans are supportive of drug pricing and reimbursement reform, the prospects of big changes to government health plans are lower if there is a policy gridlock.&rdquo;
Adding to the tailwinds for PPH are the healthcare sectors status as a value destination with credible growth prospects and earnings momentum.
&ldquo;Meanwhile, third-quarter results from the pharmaceutical sector has been upbeat so far, with almost 90% of the companies reporting better-than-expected revenues and earnings. Analysts expect the momentum to continue, with industry estimates from Factset projecting earnings growth over the next couple of years,&rdquo; according to VanEck.
What&#39;s Next: In addition to AstraZeneca and Pfizer, several other PPH components are working on coronavirus vaccines, though Moderna and Pfizer are setting the bar high with the aforementioned 95% efficacy rate. That said, there are opportunities for other competitors to make their marks, particularly if one or more PPH components can introduce a single-dose vaccine.
Eventually, the pandemic will be defeated, a scenario that should bring other fundamental factors into focus for PPH.
&ldquo;A growing, ageing and richer global population will further boost demand for improved biotechnology and healthcare. Technological advancements such as the increased use of artificial intelligence and online doctors, and evolving care models may also ensure a long tailwind for the sector,&rdquo; notes VanEck.
Investors are displaying some enthusiasm for PPH this year as highlighted by $48.48 million of inflows, representing a significant percentage of the fund&#39;s overall assets under management tally.

Long Ideas

MRNA

Write A Prescription For This Pharma ETF

For the first four months of the market&rsquo;s cornavirus recovery, one of the key themes was the dominance of biotech.&nbsp;
In the 15 weeks from the market&rsquo;s lows on March 23 until July 17, the VanEck Vectors Biotech ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bbh#NYSE">BBH</a>) rallied nearly 60% and took in inflows of nearly $84 million. The fund flew past its previous all-time high of $141 to a new all-time high of $172 thanks to massive rallies in stocks like Amgen Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amgn#NASDAQ">AMGN</a>), Moderna Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mrna#NASDAQ">MRNA</a>), and Regeneron Pharmaceuticals Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/regn#NASDAQ">REGN</a>), all of which have made new all-time highs this summer.&nbsp;
Much of this optimism has been driven by the development of vaccine and treatment candidates for COVID-19. Moderna has a $1.5 billion deal to supply the U.S. government with 100 million doses of its vaccine candidate should the drug pass Phase 3 testing. Regeneron meanwhile is working with Roche to develop, manufacture, and distribute its own coronavirus antibody cocktail.&nbsp;
Compare the performance of biotech to the performance of the VanEck Vectors Pharmaceutical ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pph#NYSE">PPH</a>) over that same period.&nbsp;
The pharma trade was no slouch&mdash;BBH rose nearly 40% and took in over $21 million of inflows on the backs of stocks like AstraZeneca (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/azn#NYSE">AZN</a>), Johnson &amp; Johnson (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnj#NYSE">JNJ</a>) and Sanofi (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/sny#NYSE">SNY</a>)&mdash;but it had nothing on biotech from mid-March to mid-July.&nbsp;
But over the past six weeks, there has been a divergence between the two. The previously high-flying biotech trade has cooled significantly, while its pharmaceuticals counterpart has moved steadily higher.&nbsp;
Perhaps pausing for a breather after a rip-roaring rally, PPH has fallen 11% from its all-time high on July 20. This as a number of the fund&rsquo;s top holdings have snapped back as we continue to await word on late-stage testing results.&nbsp;
Pharmaceuticals, on the other hand, have held up much better on a relative basis. BBH is down a mere 1.5% since July 20 and has consolidated heavily over the past two weeks (price consolidations can sometimes foreshadow a breakout).&nbsp;
Sanofi and GlaxoSmithKline (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gsk#NYSE">GSK</a>) have received $2.1 of funding from the U.S. government for funding of their joint vaccine candidate, while Johnson &amp; Johnson plans to start a late-stage trial for its coronavirus vaccine in late September.
<img src="https://lh6.googleusercontent.com/nvUrpQJQ3W9Ev7P4roRC-Ep8AsAYcO43dD9VBn243amq5b14rNQB9_wDV3R8g-tK_F6aiAWA61i8Gblv1PoWMMhBjbrjQpXfTudhGxtHH-2ce7uZS_xapCCnvKgnUCd3J77-XKLM" style="height:377px; width:624px" /> 
BBH (purple line) and PPH (candlesticks) both rallied from March-July, one has held up better than the other in August. Source: <a href="http://pro.benzinga.com">Benzinga Pro</a>
It&rsquo;s unlikely sentiment has turned fully sour on biotech, however. PPH has still taken in nearly $17 million of new assets over the past six weeks, and according to the Wall Street Journal U.S.-listed biotech companies have already raised a record amount of money via IPOs in 2020. 
&nbsp;

A Divergence Has Occurred In Healthcare

Traders are always on the lookout for the next short squeeze candidate. Short squeezes can send share prices skyrocketing in a matter of minutes and hours, and traders who are along for the ride can make a killing just by timing one squeeze correctly.
S3 Partners analyst Ihor Dusaniwsky released his latest list of the top short squeeze ETFs candidates based on short interest and short percent of float.
Dusaniwsky said there are currently only 11 U.S. ETFs with short interest of at least $25 million and short percent of float of at least 40%.
&ldquo;Borrow rates on these ETF shorts are generally cheaper than equities with high SI % Float due to the ability for brokers to create ETFs as trading or stock borrow demand increases, although ETNs and leveraged ETFs usually have higher stock borrow rates due to the difficulty and expense of creating new shares,&rdquo; Dusaniwsky wrote in the report.
See Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/09/14397551/short-squeeze-candidates-10-most-heavily-shorted-stocks">Short Squeeze Candidates: 10 Most Heavily Shorted Stocks</a>
<h3>Short Squeeze Candidates</h3>
Here are S3&rsquo;s 10 best ETF candidates for a potential short squeeze.
<ol>
<li>SPDR S&amp;P Retail (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xrt#NYSE">XRT</a>), $878.0 million short interest, 326.4% of float.</li>
<li>BARCLAYS IPTH SRS B S&amp;P SHRT TRM ETN (BATS: <a class="ticker" href="https://www.benzinga.com/stock/vxx#BATS">VXX</a>), $982.0 million short interest, 139.7% of float.</li>
<li>SPDR S&amp;P Oil &amp; Gas Explore &amp; Prod. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xop#NYSE">XOP</a>), $1.88 billion short interest, 111.7% of float.</li>
<li>VANECK VECTORS/SEMICONDUCTOR ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/smh#NYSE">SMH</a>), $1.48 billion short interest, 99.1% of float.</li>
<li>SPDR KBW Regional Banking (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kre#NYSE">KRE</a>), $1.69 billion short interest, 95.3% of float.</li>
<li>SPDR S&amp;P Biotech (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xbi#NYSE">XBI</a>), $3.29 billion short interest, 84.9% of float.</li>
<li>VANECK VECTORS/PHARMACEUTICAL ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pph#NASDAQ">PPH</a>), $95.0 million short interest, 61.9% of float.</li>
<li>PROSHARES TR II/SHORT VIX SHORT-TER (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/svxy#NYSE">SVXY</a>), $157.0 million short interest, 50.4% of float.</li>
<li>VAR RATE VELOCITY S (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dgaz#NYSE">DGAZ</a>), $88.0 million short interest, 43.4% of float.</li>
<li>SPDR S&amp;P Metals and Mining (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xme#NYSE">XME</a>), $168.9 million short interest, 42.8% of float.</li>
</ol>

Analyst Color

Short Sellers

DGAZ

SVXY

Barclays Bank iPath S&P 500 VIX Short-Term Futures ETN

10 ETFs That Could Be Primed For A Short Squeeze

Total earnings for <a href="https://www.zacks.com/ZER/zer_get_pdf.php?r=H0170834233&amp;ADID=ZP_Article_EarningsTrends">95.3%</a> of the total healthcare market capitalization are up 7.6% on revenue growth of 4.6%. Though earnings growth appears solid compared with many other sectors, earnings and revenue beat ratios of 72.5% and 58.8%, respectively, look disappointing.
	Among the most notable players, Johnson &amp; Johnson JNJ was the first major drug company to report earnings on Oct 17, followed by Eli Lilly and Company LLY and Bristol-Myers Squibb Company BMY on Oct 24 and Oct 26, respectively. Two other major U.S. drug companies, Merck MRK and Pfizer PFE, reported on Oct 27 and Oct 31, respectively. These industry primes posted solid results with either earnings or revenue beats or both.
	Johnson and Johnson Earnings in Focus
	The world&#39;s biggest maker of healthcare products continued its long streak of earnings beat. Earnings per share came in at $1.90, 10 cents ahead of the Zacks Consensus Estimate and 13.1% higher than the year-ago quarter. Revenues grew 10.3% year over year to $19.65 billion and edged past the Zacks Consensus Estimate of $19.28 billion. Johnson &amp; Johnson raised its full-year earnings per share guidance to $7.25-$7.30 from $7.12-$7.22 and revenue guidance to $76.1-$76.5 billion from $75.8-$76.1 billion (read: <a href="https://www.zacks.com/stock/news/279372/healthcare-etfs-in-focus-on-johnson-amp-johnson-q3-earnings">Healthcare ETFs in Focus on Johnson &amp; Johnson Q3 Earnings</a>).
	Pfizer Earnings in Focus
	The U.S. drug giant came up with an earnings beat and in-line revenues. Earnings per share of 67 cents came in a couple of cents above the Zacks Consensus Estimate while revenues of $13.7 billion were in line with the estimate of $13.17 billion. On a year-over-year basis, earnings per share and revenues rose 10% and 1%, respectively. For 2017, Pfizer narrowed the revenue guidance range to $52.4-$53.1 billion from $52-$54 billion while raised the earnings per share guidance range to $2.58-$2.62 from $2.54-$2.60.
	Merck Earnings in Focus
	Merck beat the earnings estimate while missed on revenues. Earnings per share came in at $1.11, surpassing the Zacks Consensus Estimate of $1.03 and improving 3.7% from the year-ago quarter. Revenues declined 2% year over year to $10.33 billion and were below the Zacks Consensus Estimate of $10.51 billion. Merck raised its revenue guidance to $40-$40.5 billion from $39.4-$40.4 billion and earnings per share guidance to $3.91-$3.97 from $3.76-$3.88 for this year.
	Bristol-Myers Earnings in Focus
	Bristol-Myers missed on earnings while beats on revenues. It reported earnings per share of 75 cents, a couple of cents below the estimate. Revenues grew 7.1% to $5.25 billion and edged past the Zacks Consensus Estimate of $5.19 billion. The company raised its earnings per share guidance to $2.95-$3.05 from $2.90-$3.00 (see: <a href="https://www.zacks.com/funds/etfs/etf-categories/Health-Care-ETFs-13">all the Healthcare ETFs here</a>).
	Eli Lilly Earnings in Focus
	Eli Lilly topped the Zacks Consensus Estimate on both fronts. Earnings of $1.05 outpaced the Zacks Consensus Estimate by couple of cents and came in 19% higher than the year-ago quarter. Revenues grew 9% to $5.66 billion and beat the $5.52-billion estimate. Like other drug makers, Eli Lilly also raised its 2017 revenue and earnings guidance. It now expects revenues in the range of $22.4-$22.7 billion compared with the previous expectation of $22.0-$22.5 billion and earnings per share in the range of $4.15-$4.25 versus $4.10-$4.20 expected previously.
	ETF Angle
	The string of earnings beat failed to boost pharma ETFs as they saw rough trading over the past one month. Below, we have highlighted these in detail. These funds have a Zacks ETF Rank #3 (Hold) with a High risk outlook:
	PowerShares Dynamic Pharmaceuticals Fund PJP
	This is by far the most popular choice in the pharma space that follows the Dynamic Pharmaceuticals Intellidex Index. The product has AUM of about $663.7 million and sees a lower volume of around 52,000 shares a day. The fund charges 56 bps in fees and expenses. Holding 30 stocks, the fund invests around 22.8% share in the in-focus five firms. The ETF has lost 6% in a month.
	iShares U.S. Pharmaceuticals ETF IHE
	This ETF provides exposure to 42 pharma stocks by tracking the Dow Jones U.S. Select Pharmaceuticals Index. The in-focus firms are the top five holdings in the basket accounting for a combined 40.3% of total assets, suggesting heavy concentration. The product has $594.5 million in AUM and charges 44 bps in fees and expense. Volume is light as it exchanges about 19,000 shares a day. The fund has shed 6% in a month (read: <a href="https://www.zacks.com/stock/news/282089/what-lies-in-store-for-pharma-etfs">What Lies in Store for Pharma ETFs?</a>).
	SPDR S&amp;P Pharmaceuticals ETF XPH
	This fund provides exposure to the pharma companies by tracking the S&amp;P Pharmaceuticals Select Industry Index. With AUM of $396.6 million, it trades in a good volume of around 90,000 shares a day and charges 35 bps in fees a year. In total, the product holds 39 securities with the in-focus five firms taking nearly 5% share each. The product was down 7% in the same period.
	VanEck Vectors Pharmaceutical ETF PPH
	This ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 26 stocks in its basket. Johnson &amp; Johnson, Pfizer, Bristol-Myers, and Eli Lilly accounts for at least 5% share each while Merck makes up for 4.4% of assets. The product has amassed $262.4 million in its asset base and trades in a moderate volume of about 67,000 shares a day. Expense ratio comes in at 0.35%. The fund has lost 5.9% in a month. 
	&nbsp;<img alt="" src="https://staticx-tuner.zacks.com/images/zadmin_tuner_image/pharma etf.jpg" style="width: 620px; height: 252px;" />
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	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&amp;d_alert=ZER_LINK&amp;t=BMY&amp;ADID=BENZ_CONTENT_ZER_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;cid=CS-BENZ-FT-282412">Bristol-Myers Squibb Company (NYSE: </a><a class="ticker" href="/stock/bmy#NYSE">BMY</a>): Free Stock Analysis Report 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&amp;d_alert=ZER_LINK&amp;t=PFE&amp;ADID=BENZ_CONTENT_ZER_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;cid=CS-BENZ-FT-282412">Pfizer, Inc. (NYSE: </a><a class="ticker" href="/stock/pfe#NYSE">PFE</a>): Free Stock Analysis Report 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&amp;d_alert=ZER_LINK&amp;t=LLY&amp;ADID=BENZ_CONTENT_ZER_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;cid=CS-BENZ-FT-282412">Eli Lilly and Company (NYSE: </a><a class="ticker" href="/stock/lly#NYSE">LLY</a>): Free Stock Analysis Report 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&amp;d_alert=ZER_LINK&amp;t=JNJ&amp;ADID=BENZ_CONTENT_ZER_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;cid=CS-BENZ-FT-282412">Johnson &amp; Johnson (NYSE: </a><a class="ticker" href="/stock/jnj#NYSE">JNJ</a>): Free Stock Analysis Report 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&amp;d_alert=ZER_LINK&amp;t=MRK&amp;ADID=BENZ_CONTENT_ZER_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;cid=CS-BENZ-FT-282412">Merck &amp; Company, Inc. (NYSE: </a><a class="ticker" href="/stock/mrk#NYSE">MRK</a>): Free Stock Analysis Report 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp/?ALERT=ETF225&amp;adid=BENZ_CONTENT_ETF_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;d_alert=rd_final_rank&amp;t=PJP&amp;split=1&amp;cid=CS-BENZ-FT-282412">PWRSH-DYN PHARM (ETF:PJP): ETF Research Reports</a> 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp/?ALERT=ETF225&amp;adid=BENZ_CONTENT_ETF_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;d_alert=rd_final_rank&amp;t=XPH&amp;split=1&amp;cid=CS-BENZ-FT-282412">SPDR-SP PHARMA (ETF:XPH): ETF Research Reports</a> 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp/?ALERT=ETF225&amp;adid=BENZ_CONTENT_ETF_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;d_alert=rd_final_rank&amp;t=PPH&amp;split=1&amp;cid=CS-BENZ-FT-282412">VANECK-PHARMA (ETF:PPH): ETF Research Reports</a> 
	&nbsp; 
	<a href="http://www.zacks.com/registration/pfp/?ALERT=ETF225&amp;adid=BENZ_CONTENT_ETF_ARTCAT_ETF_NEWS_AND_COMMENTARY&amp;d_alert=rd_final_rank&amp;t=IHE&amp;split=1&amp;cid=CS-BENZ-FT-282412">ISHARS-US PHARM (ETF:IHE): ETF Research Reports</a> 
	&nbsp; 
	<a href="http://www.zacks.com/stock/news/282412/pharma-etfs-down-post-q3-earnings?cid=CS-BENZ-FT-282412">To read this article on Zacks.com click here.</a> 
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Pharma ETFs Down Post Q3 Earnings

We are halfway through 2017 and pharma stocks have recovered nicely with their performance representing a sharp contrast to 2016 when the sector was under immense pressure due to the drug pricing issue. Another factor that weighed on pharma stocks last year was the noticeably lower number of FDA approvals. 2016 saw only 22 treatments gaining FDA approval, well below 45 approvals in 2015 and 41 in 2014. The industry was also hit by some high profile R&amp;D failures as well as mixed results, slower-than-expected new product launches and increasing competition.
&nbsp;
However, the sector has fared better this yearand the NYSE ARCA Pharmaceutical Index is up 10.1% year-to-date (YTD). New product sales ramp up, R&amp;D success and innovation, strong results, a higher number of FDA approvals and continued strong performance from legacy products are some of the factors that could contribute to a sustained recovery in the sector. Tax reforms and cash repatriation would support a recovery as well. (Read: <a href="https://www.zacks.com/stock/news/266090/forget-big-tech-biotech-etfs-are-soaring-higher">Forget Big Tech; Biotech ETFs are Soaring Higher</a>)
&nbsp;
Importantly, investors now seem to be more comfortable with the drug pricing scenario and are willing to look at the fundamentals of the sector. Although the drug pricing issue will remain a headwind this year as well, expectations are that steps taken by the Trump administration to drive down drug prices will not be as draconian as previously expected.&nbsp;
&nbsp;
Deregulation and increased competition seem to be some of the ways that will be used to control drug prices. FDA Commissioner Scott Gottlieb recently said that the agency is working on a plan to lower healthcare costs by speeding up the development of next-generation treatments, especially for rare diseases or targeted cancer therapies.
&nbsp;
Faster Drug Approval Process?
&nbsp;
At a meeting with pharma majors earlier this year, President Trump spoke about speeding up the FDA approval process. The President said that the FDA will be streamlined and the drug approval process will be much faster. The 21st Century Cures Act is a step in this direction.
&nbsp;
With the passing of this Act, expectations are that there will be more innovation in the sector and, maybe, a surge in new drug approvals. According to an IMSQuintiles report, the late-phase R&amp;D pipeline for the industry indicates that there should be about 40-45 new brand launches every year through 2021.
&nbsp;
Meanwhile, the FDA has already surpassed last year&#39;s total tally with 23 drugs being approved so far in 2017. &nbsp;(Read: <a href="https://www.zacks.com/stock/news/266846/how-to-build-a-winning-etf-portfolio-for-secondhalf-2017">How to Build a Winning ETF Portfolio for Second-Half 2017</a>)
&nbsp;
Will M&amp;As Pick Pace?
&nbsp;
There has been a lot of consolidation in the pharma industry over the last few years with quite a few deals being announced/completed in 2016. Expectations are high that M&amp;As will increase as the year progresses -- potential tax reform and cash repatriation are expected to lead to a boost in this area. While not too many deals have been announced so far in 2017, we could see several M&amp;A agreements being announced in the coming quarters though companies are wary of bidding wars leading to over-priced deals.
&nbsp;
Companies with innovative technologies and pipelines are highly sought after. Niche disease areas like nonalcoholic steatohepatitis (NASH), immuno-oncology and multiple sclerosis are in demand. Treatments for orphan diseases are also much sought after with quite a few deals being signed in these areas. (Read: <a href="https://www.zacks.com/stock/news/266243/best-leveraged-etfs-of-first-half-of-2017">Best Leveraged ETFs of First Half of 2017</a>)
&nbsp;
Innovative Pipelines &amp; Catalyst Rich 2017 
&nbsp;
Pharma companies continue to work on bringing innovative new treatments to market, and there could be significant catalysts in the coming quarters in the form of important new product approvals as well as major data read-outs especially in key therapeutic areas like immuno-oncology, Alzheimer&#39;s, central nervous system disorders, and immunology/inflammation.
&nbsp;
Cancer remains a key focus area. According to IMSQuintiles, 68 new cancer drugs were approved for 22 indications from 2011 to 2016 while worldwide costs for cancer therapeutics and supportive care drugs shot up from $91 billion in 2012 to $113 billion in 2016. More than 600 molecules are in late stage development with the majority being targeted therapy.
&nbsp;
Meanwhile, sales of products that gained approval over the last two years as well as line extensions should ramp up and boost growth.
&nbsp;
Pharma ETFs in Focus
&nbsp;
Highlighted below are some pharma ETFs - ETFs present a low-cost and convenient way to get a diversified exposure to the sector.
&nbsp;
Powershares Dynamic Pharmaceuticals ETF (ETF:PJP)
&nbsp;
PJP, launched in Jun 2005 by Invesco PowerShares, tracks the Dynamic Pharmaceuticals Intellidex Index. The fund covers healthcare stocks. The top 3 holdings include Celgene Corporation (5.24%), Amgen Inc. (5.14%) and AbbVie Inc. (5.01%). The total assets of the fund as of Jul 6, 2017 were $742.1 million representing 30 holdings. The fund&#39;s expense ratio is 0.57% while dividend yield is 0.81%. The trading volume is roughly 53,041 shares per day.
&nbsp;
SPDR S&amp;P Pharmaceuticals ETF (ETF:XPH)
&nbsp;
XPH, launched inJun 2006, tracks the S&amp;P Pharmaceuticals Select Industry Index. This ETF primarily covers pharma stocks with the top 3 holdings being Akorn, Inc. (5.27%), Jazz Pharmaceuticals plc (5.19%), and Endo International, plc (4.7%).
&nbsp;
Total assets as of Jul 6, 2017 were $458.5 million representing 38 holdings. The fund&#39;s expense ratio is 0.35% and dividend yield is 0.62%.The trading volume is roughly 58,019 shares per day.
&nbsp;
iShares U.S. Pharmaceuticals (ETF:IHE)
&nbsp;
IHE, launched in May 2006, seeks investment results that correspond generally to the price and yield performance of the Dow Jones U.S. Select Pharmaceuticals Index. The fund mainly consists of pharma companies (89.8%). Biotech companies account for about 10.1% of the fund.
&nbsp;
The top 3 holdings of this fund are Johnson &amp; Johnson (9.95%), Pfizer Inc. (8.21%) and Merck &amp; Co. Inc. (7.58%). The total assets of the fund as of Jul 6, 2017 were $693.7 million representing 41 holdings. The fund&#39;s expense ratio is 0.44% with the dividend yield being 1.25%. The trading volume is roughly 19,527 shares per day.
&nbsp;
Market Vectors Pharmaceutical (ETF:PPH)
&nbsp;
PPH was launched in Dec 2011 and tracks the Market Vectors U.S. Listed Pharmaceutical 25 Index. This ETF covers healthcare stocks. While the expense ratio is 0.35%, dividend yield is 1.95%. The trading volume is roughly 39,357 shares per day. The total assets of the fund as of Jul 6, 2017 were $276.8 million representing 26 holdings. The top 3 holdings of this fund are Johnson &amp; Johnson (8.63%), Novartis AG (6.4%) and AbbVie Inc. (5.17%).
&nbsp;
Conclusion
&nbsp;
Although fears regarding the drug pricing issue have waned, it will nevertheless remain a headwind until the Trump administration comes out with a policy for controlling drug prices. Meanwhile, increased pipeline visibility and appropriate utilization of cash should increase confidence in the sector.
&nbsp;
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What Lies Ahead For Pharma ETFs In Second Half 2017

The strongest catalysts for a pharma stock are the various milestones on the road to FDA approval for new drugs. For new investors, they&rsquo;ll often see a stock rise astronomically, but, when they go to make sense of the reasons for the jump, they&rsquo;re greeted with unfamiliar acronyms.
Let&rsquo;s try to make some sense of them and the process a new drug goes through before approval.
<h3>Phase Trials</h3>
One news item that regularly affects the price of a stock is the different phase studies, of which there are three, aptly called Phase 1, Phase 2 and Phase 3.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/general/biotech/16/09/8500542/drug-price-bubble-a-result-of-decade-long-economic-policy-issues">Drug Price Bubble A Result Of Decade-Long Economic Policy Issues</a></bzrelatedlink>
<ul>
<li>Phase 1 is to determine the safety and dosage of a new drug. It typically takes several months. About 70 percent of drugs move past this Phase and onto the next, according to the FDA.</li>
<li>Phase 2 is to determine the efficacy and side effects of a new drug. This can take several months to two years. According to the FDA, about a third of drugs studied are able to make it past Phase 2 studies.</li>
<li>Phase 3 studies can take one to four years and are designed to determine the efficacy of the drug as well as monitoring the adverse reactions to the drug. According to the FDA, between 25 and 30 percent of new drugs are able to make it past Phase 3.</li>
</ul>
The milestones a drug hits as it passes through these three discrete phases often act as catalysts for the price of the company&rsquo;s stock, as well as the next step.
<h3>New Drug Application (NDA)</h3>
The company has enough information on its new drug to complete and submit a New Drug Application (NDA). Since 1938, every drug in United States hospitals and pharmacies has had a New Drug Application (NDA) submitted and approved.
According to the FDA, each NDA must show three things:
<ul>
<ol>
<li>The drug is &ldquo;safe and effective in its proposed uses,&rdquo; with the benefits outweighing the risks.</li>
<li>The labeling is appropriate and contains all necessary warnings, side effects and ingredients.</li>
<li>The manufacturing process and the &ldquo;controls used to maintain the drug&rsquo;s quality&rdquo; (i.e., capsules, packaging) are able to effectively preserve the drug&rsquo;s &ldquo;identity, strength and purity.&rdquo;</li>
</ol>
</ul>
&ldquo;The documentation required in an NDA is supposed to tell the drug&#39;s whole story,&rdquo; according to the FDA website, &ldquo;including what happened during the clinical tests, what the ingredients of the drug are, the results of the animal studies, how the drug behaves in the body, and how it is manufactured, processed and packaged.&rdquo;
<h3>PDUFA Panel</h3>
The Prescription Drug User Fee Act (PDUFA) was originally passed in 1992 with the purpose of providing greater funding for reviewers so that more applications could be reviewed. The acronym is most often heard in reference to PDUFA dates or the amount of time the FDA has to review an application and either approve or deny it &mdash; typically ten months.
Sometimes, the FDA will give a drug a priority designation, which brings the PDUFA date from ten months to six, essentially fast-tracking the process and shortening the amount of time before a drug can hit the market.
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GNRX

Getting Into The Drug Business: From NDAs To PDUFA Dates

Pfizer Inc. (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) revealed Monday it is acquiring Medivation Inc (NASDAQ: <a class="ticker" href="/stock/mdvn#NASDAQ">MDVN</a>), which has plenty of market participants speculating as to which companies could be the next takeover targets in the pharmaceuticals space.
<h3>A Pharma ETF</h3>
Of course, there are exchange-traded funds with which to play the pharmaceuticals mergers and acquisitions theme, including the Market Vectors Pharmaceutical ETF (NYSE: <a class="ticker" href="/stock/pph#NYSE">PPH</a>). The $292.1 million PPH follows the MVIS US Listed Pharmaceutical 25 Index, &ldquo;which is intended to track the overall performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well a production, marketing and sales of pharmaceuticals,&rdquo; <a href="http:// https://www.vaneck.com/vaneck-vectors/equity-etfs/pph/snapshot/">according to VanEck</a>.
Home to 26 stocks, PPH is a potentially compelling mix of buyers and sellers, assuming pharmaceuticals mergers and acquisitions heats up in earnest.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/general/biotech/16/08/8381635/pfizer-has-had-a-busy-m-a-year-or-has-it">Pfiezer Has Had A Busy M&amp;A Year...Or Has It?</a></bzrelatedlink>
&ldquo;Consolidation continues as big pharmaceutical firms search for scale and efficiencies. However, as the number of new drugs in the pipeline increases, and manufacturers face manageable patent expiry risks, large acquisitions will become less necessary. We expect larger manufacturers to seek out individual therapeutics and smaller biotech companies through targeted acquisitions and partnerships designed to strengthen innovative drug portfolios,&rdquo; said Fitch Ratings <a href="https://www.fitchratings.com/site/pr/1010692">in a recent note</a>.
Pfizer, which is nearly 5 percent of PPH&#39;s weight, has been acquisitive. Earlier this year, Dow component Pfizer paid $5.2 billion to acquire Anacor. PPH&#39;s other holdings, none of which command more than 5.4 percent of the ETF&#39;s weight, include some other names with the balance sheet strength to get large deals done. That group includes Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>) and Merck &amp; Co., Inc. (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).
More than a third of PPH&#39;s current holdings have been rumored to be takeover at some point and a comparable amount of the ETF&#39;s lineup, including Pfizer, are seen as credible participants in pharmaceuticals deals.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/08/8377111/pfizer-has-emerged-the-victor-in-the-buyout-battle-for-m">Pfizer Has Emerged The Victor In The Buyout Battle For Medivation</a></bzrelatedlink>
&ldquo;Pfizer&#39;s acquisition of Anacor in June is another example of a recent targeted acquisition. Anacor&#39;s eczema treatment crisaborole will be an important near-term asset for the company. Other transactions include Bristol-Myers Squibb&#39;s acquisition of Padlock Therapeutics, which could expand its presence in the treatment of rheumatoid arthritis. In its acquisition of Glycostasis, Inc., Eli Lilly looks to develop a form of insulin that self-releases when a diabetic patient&#39;s blood-sugar level is too high,&rdquo; added Fitch.
Those stocks combine for about 14 percent of PPH&#39;s weight.
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Disclosure: Todd Shriber owns shares of JNJ.

MDVN

Write A Prescription For More Pharma M&A With This ETF

The healthcare sector, the third-largest sector weight in the S&amp;P 500, is the worst-performing group in the benchmark U.S. index this year. And that was before news of the collapse Pfizer Inc. (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>)'s deal to acquire Allergan plc Ordinary Shares (NYSE: <a class="ticker" href="/stock/agn#NYSE">AGN</a>).
<h3>Pfizer-Allergan Fall-Through Has Tangible Effects</h3>
Dow component Pfizer was willing to shell out $160 billion to acquire Allergan, the maker of Botox, for, among other reasons, tax benefits that come with Allergan&#39;s Ireland domicile. Not that the U.S. government is a particularly good steward of anyone&#39;s money per se, but Uncle Sam is definitely not fond of deals such as Pfizer/Allergan, also known as inversions. The specter of the government changing the rules as it sees fit is seen as a primary reason Pfizer and Allergan <a href="http://www.cnbc.com/2016/04/05/pfizer-allergan-will-mutually-terminate-merger-over-inversion-rule-changes-sources-say.html">mutually agreed to part ways</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/04/7809976/is-allergan-worth-over-300-without-pfizer">Is Allergan Worth Over $300 Without Pfizer?</a></bzrelatedlink>
In the near term, this is not the type of news an exchange-traded fund such as the Market Vectors Pharmaceutical ETF (NYSE: <a class="ticker" href="/stock/pph#NYSE">PPH</a>) needs to contend with. PPH is down 11.3 percent year-to-date and closed Tuesday more than 22 percent below its 52-week high.
In addition to its 4.2 percent weight to Allergan, PPH features some smaller weight to other &ldquo;hedge fund hotels,&rdquo; including the controversial Valeant Pharmaceuticals Intl Inc (NYSE: <a class="ticker" href="/stock/vrx#NYSE">VRX</a>) and Mallinckrodt PLC (NYSE: <a class="ticker" href="/stock/mnk#NYSE">MNK</a>), a stock some short sellers see as making Valeant <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/03/7715819/citron-mallinckrodt-makes-valeant-look-like-choirboys">look like &ldquo;choirboys</a>.&rdquo;
Allergan, Valeant and Mallinckrodt combine for 7.4 percent of PPH&#39;s weight. For now, that is the bad news. The good news is that steadier fare such as Dow components Pfizer and Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>) top PPH&#39;s lineup. 
<h3>It's Not All Bad For PPH</h3>
Although the healthcare sector is struggling, J&amp;J is one of the 19 Dow stocks up on a year-to-date basis. The company is a steady dividend grower <a href="http://www.barrons.com/articles/j-j-stock-can-stay-hot-aided-by-strong-pipeline-1459447669">with a robust pipeline</a>. Merck &amp; Co., Inc. (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>), another PPH holding, is also one of the Dow stocks in the green this year.
Plus, mergers and acquisitions activity is not dead for PPH holdings just because Pfizer and Allergan are parting ways. It is just speculation at this point, but if Pfizer agrees to drop the inversion bit, it could revisit acquiring AstraZeneca plc (ADR) (NYSE: <a class="ticker" href="/stock/azn#NYSE">AZN</a>), which the Viagra maker tried to acquire two years ago. AstraZeneca is 4.5 percent of PPH&#39;s weight.
Overall, PPH is home to 26 stocks, several of which remain legitimate takeover targets, while at least 20 percent of the ETF&#39;s lineup, if not more, have the resources to make pharmaceuticals deals happen.
Disclosure: Todd Shriber owns shares of JNJ.
Image Credit: <a href="https://pixabay.com/en/medications-cure-tablets-pharmacy-342481/">Public Domain</a>

Short Ideas

Hedge Funds

PPH May Be Home To Hedge Fund Hotels, But This ETF Can Endure

Brand-name prescription drug prices have skyrocketed over the past five years, coming in twice as expensive as the prices in 2011.

	Express Scripts Holding Company (NASDAQ: <a class="ticker" href="/stock/esrx#NASDAQ">ESRX</a>), the United States&#39; largest pharmacy conglomerate, compiled the data and came to the initial findings regarding the price doubling.

	&quot;Express Scripts blamed the soaring cost of medicines on a class of drugs that is loosely known as &lsquo;specialty medications,&#39;&quot; according to the<a href="http://www.ft.com/intl/cms/s/0/900291d8-ea04-11e5-888e-2eadd5fbc4a4.html"> Financial Times</a>. Within this context, &quot;specialty medications&quot; are drugs used to treat &quot;complex conditions such as rheumatoid arthritis and cancer&quot; and come with a high price tag.

	<img alt="rx.png" src="/files/images/2016/March/15/rx.png" style="width: 500px; height: 302px;" />

	Source: <a href="http://www.ft.com/intl/cms/s/0/900291d8-ea04-11e5-888e-2eadd5fbc4a4.html">Financial Times, Original From Express Scripts</a>

	While branded drugs have increased, driven by specialty medications, Express Scripts found that &quot;the average price of generic medicines [&hellip;] fell roughly 20 per cent last year.&quot;

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/general/biotech/16/03/6762429/hillary-clinton-im-going-after-valeant">Hillary Clinton: &quot;I&#39;m Going After&quot; Valeant</a></bzrelatedlink>
<h3>
	Broad Concerns</h3>

	Despite the implicit pricing concerns, FT highlighted how the study brings into context political implications as well.

	During this year&#39;s presidential race, drug manufacturers have come under scrutiny from all sides, with presidential hopeful Hillary Clinton campaigning an &quot;attack&quot; on Valeant Pharmaceuticals Intl Inc (NYSE: <a class="ticker" href="/stock/vrx#NYSE">VRX</a>) and its specific price hikes, and Donald Trump proposing Medicare should have the freedom to negotiate pricings for medications.

	Against this backdrop, FT commented, &quot;Fears that the candidates will follow through on their promises with a crackdown on drug prices have contributed to sharp sell-off in pharmaceuticals and biotech stocks in recent months.&quot;

	&quot;The Nasdaq biotech index has lost roughly a third of its value since September, when Mrs. Clinton pledged to crack down on price &lsquo;gouging&#39; in a tweet,&quot; according to FT.
<h3>
	At Time Of Writing&hellip;</h3>
<ul>
<li>
		Valeant was down 38.88 percent at $42.17.</li>
<li>
		Express Scripts was down 1.33 percent at $70.00.</li>
<li>
		iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: <a class="ticker" href="/stock/ibb#NASDAQ">IBB</a>) was down 3.04 percent at $253.49.</li>
<li>
		ProShares Ultra Nasdaq Biotechnology ETF (NASDAQ: <a class="ticker" href="/stock/bib#NASDAQ">BIB</a>) was down 6.33 percent at $38.75.</li>
<li>
		Market Vectors Pharmaceutical ETF (NASDAQ: <a class="ticker" href="/stock/pph#NASDAQ">PPH</a>) was down 3.20 percent at $58.00.</li>
</ul>

Movers

ESRX

New Study Suggests Drug Prices Have Doubled Since 2011: What's It Mean For The Market?

In recent years, exchange-traded funds tracking the healthcare sector, the third-largest sector weight in the S&amp;P 500, have become increasingly refined.
 For example, since late 2014, ETFs have come to market that offer investors exposure to biotech stocks at specific stages of FDA clinical trials. Last year, an ETF debuted dedicated to stocks with heavy emphasis on cancer drugs and treatments.
<h3>The New Name</h3>
So, the Market Vectors Generic Drugs ETF (NASDAQ: GNRX), which launched Wednesday, is by no means an outlandish concept. Given the boom in the generic drugs industry over the past several years and the group&#39;s status as a prime destination for large-scale mergers and acquisitions activity, the Market Vectors Generic Drugs ETF is actually an idea that makes a lot of sense.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/01/6136023/empire-analyst-sell-sucampo-pharma-it-has-50-downside">Empire Analyst: Sell Sucampo Pharma, It Has 50% Downside</a></bzrelatedlink>
&ldquo;Expiring patents on various brand name drugs and the development of biosimilars are among the main factors driving returns in the generic pharmaceuticals space. Significant investment in research and development is still required, which reduces competition, but time to market can be quicker than brand name drugs, allowing companies to price their drugs at a significant discount,&rdquo; <a href="http://www.businesswire.com/news/home/20160113005281/en/Van-Eck-Launches-Market-Vectors%C2%AE-Generic-Drugs">said Market Vectors in a statement</a>. 
&ldquo;As a percentage of drugs distributed globally, spending on generics is expected to increase from 40 percent in 2013 to 46 percent in 2018.&rdquo;
<h3>The Fund And Its Index</h3>
The new ETF tracks the Indxx Global Generics &amp; New Pharma Index. That benchmark &ldquo;is intended to track the overall performance of companies that derive a significant proportion of their revenues or that have the potential to derive a significant proportion of their revenues from the generic drug industry, or that have a primary business focus on the generic drug industry,&rdquo;<a href="http://www.vaneck.com/funds/GNRX.aspx"> according to Market Vectors</a>.
GNRX is home to 84 stocks and its top 10 holdings combine for nearly 48 percent of the new ETF&#39;s weight. Israel&#39;s Teva Pharmaceutical Industries Ltd (ADR) (NYSE: <a class="ticker" href="/stock/teva#NYSE">TEVA</a>) is GNRX&#39;s largest holding. Other well-known names in the new ETF include Allergan plc Ordinary Shares (NYSE: <a class="ticker" href="/stock/agn#NYSE">AGN</a>), Perrigo Company plc Ordinary Shares (NYSE: <a class="ticker" href="/stock/prgo#NYSE">PRGO</a>) and Mylan NV (NASDAQ: MYL).
GNRX is a global ETF with just under 41 percent of its weight allocated to U.S. stocks. The bulk of the ETF&#39;s ex-U.S. Exposure is allocated to emerging markets companies, as India, South Korea and China combine for over 31 percent of the fund&#39;s weight.
&ldquo;According to the Generic Pharmaceutical Association (GPhA), 88 percent of the drugs dispensed in the U.S. are generics,&rdquo; according to Market Vectors.
The new ETF charges 0.55 percent per year, or $55 for every $10,000 invested. Other healthcare ETFs from Market Vectors include the Market Vectors Biotech ETF (NYSE: <a class="ticker" href="/stock/bbh#NYSE">BBH</a>) and the Market Vectors Pharmaceutical ETF (NYSE: <a class="ticker" href="/stock/pph#NYSE">PPH</a>).
Image Credit: <a href="https://pixabay.com/en/test-tube-lab-medical-research-214185/">Public Domain</a>

New ETFs

Intraday Update

PRGO

TEVA

New ETF Is A Refined Pharmaceuticals Play

BZ NOTE: Bass says he expects to win battle saying 'I did not enter it to not win. Interview will be aired Sunday evening January 3rd on Wall Street Week.

UPDATE: Speaking On Pharma Patents Kyle Bass Says 'there are some stupid patents out there', Highlights Intellectual Patent On Vile Protecting Diprivan Drug

The tale of Valeant Pharmaceuticals Intl Inc (NYSE: <a class="ticker" href="/stock/vrx#NYSE">VRX</a>) has gotten plenty of press in recent days. Even with Wednesday&#39;s nifty 11.9 percent surge (at this writing) on heavy volume, the drug maker&#39;s shares are still down about 18 percent over the past week and more than 23 percent over the past month.
 That is good enough for bear market territory and then some.
&ldquo;Valeant <a href="http://blogs.barrons.com/focusonfunds/2015/09/28/valeant-tumbles-as-house-dems-seek-subpoena/">tumbled after Democratic lawmakers</a> pushed for a subpoena that would force the company&nbsp;to disclose more information about price increases for two heart drugs,&rdquo; according to <a href="http://blogs.barrons.com/focusonfunds/2015/09/30/valeants-slide-triggers-hedge-fund-pain/">Barron&#39;s</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5876466/valeant-gets-vote-of-confidence-from-bofa-firm-sees-80-u">Valeant Gets Vote Of Confidence From BofA</a></bzrelatedlink>
As Barron&#39;s goes on to note, several hedge funds, including Bill Ackman&#39;s Pershing Square, have suffered large paper losses on the back of Valeant&#39;s decline. Other funds, including those of the exchange-traded variety, have also been pinched by the pharmaceuticals maker&#39;s tumble.
A 3.4 percent weight to Valeant coupled with being a dedicated pharmaceuticals ETF in the aftermath of political posturing explain why the Market Vectors Pharmaceutical ETF (NYSE: <a class="ticker" href="/stock/pph#NYSE">PPH</a>) has struggled in recent weeks. PPH&#39;s one-month decline is just over 8 percent, or barely more than a third of Valeant&#39;s drop over the same period.

	The $308.7 million PPH is home to 26 stocks, 16 of which command larger weights than Valeant. Therefore, even if the stock continues to struggle while the broader healthcare space rebounds &ndash; a big &ldquo;if&rdquo; at the moment to be sure, PPH should be alright.
<h3>The Canadian Element</h3>
Valeant&#39;s woes, should they persist, are more problematic for the iShares MSCI Canada Index (ETF) (NYSE: <a class="ticker" href="/stock/ewc#NYSE">EWC</a>). Valeant is a Canadian company and as such is the third largest of the 93 stocks held be EWC. The iShares MSCI Canada ETF is the largest Canada ETF trading in New York and is the ETF with biggest Valeant weight, nearly 5.4 percent as of September 28, <a href="http://www.ishares.com/us/products/239615/EWC">according to issuer data</a>.

	Being home to the largest Valeant among U.S.-listed ETFs has resulted in a one-month loss of 6.4 percent for EWC, but to be fair, the Canada ETF has been somewhat solid over the past five days, losing less than 0.75 percent.

	Still, EWC is down 22 percent year-to-date. That sounds bad and it is, but most of that weakness cannot be pinned on Valeant. As home to perhaps the largest oil and gas reserves outside of the Organization of Petroleum Exporting Countries (<a href="http://www.benzinga.com/topic/opec">OPEC</a>) world, Canada and its economy are highly levered to oil prices.

	That explains why the economy there is dangerously flirting with a possible recession and why, among developed market single-country ETFs, EWC is one of the most highly correlated to oil prices. The ETF allocates over 20 percent of its weight to the energy sector. Energy is EWC&#39;s second-largest sector allocation at about two and a half times the weight devoted to materials stocks.
Image Credit: <a href="https://pixabay.com/en/drug-health-addiction-stress-621843/">Public Domain</a>

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