You Have to Wait on Biotech Plays

Is health care finished as a concept? I think that you could argue that it is finished as a hiding place. The health care business has been rocked by problems before, and it has managed to bounce back time and again, but this one's really painful because there's nothing but bogeymen out there telling us what is going to happen. We are in a "shoot first, ask questions later" mode. One thing I would point out is that the drug industry has been a remarkable stalwart in Congress, and the president's going to have a tougher time rolling them that he would other industries.

The real issue for me is valuation. Let's say the president doesn't want Genzyme (GENZ - commentary - Cramer's Take) to get reimbursed the way it has been for orphan drugs. It's been the Democrats, not the Republicans, who have fought for these companies. The Democrats have always held up the group as inventors, not salespeople, so my take is that after the smoke clears, you will come back to that group.

But is now the time to buy them? I think their outperformance has been too great in the last six months to call a bottom, and the big pharma companies are reeling, too.

Would I short them here? You should have shorted them two days ago.

Going long, though? I'd wait, which is why we trimmed the group yesterday forAction Alerts PLUS. My instincts, given congressional love for biotech, though, is that when they settle, you will be surprised the resistance that Obama gets on the issue, particularly the orphan drug issue.

At the time of publication, Cramer had no positions in the stocks mentioned.

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Know what you own: Other companies in the biotech industry include Celgene (CELG - commentary - Cramer's Take), Gilead (GILD - commentary - Cramer's Take), Amgen (AMGN - commentary - Cramer's Take), Genentech (DNA - commentary - Cramer's Take), Amylin (AMLN - commentary - Cramer's Take) and Biogen Idec (BIIB - commentary - Cramer's Take).

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