The thorn in biotech’s side? Well, let’s just say the election isn’t helping and neither is Valeant Pharmaceuticals (VRX) .
“Valeant has destroyed pricing for the drug companies,” according to TheStreet’s Jim Cramer, co-manager of the Action Alerts PLUS portfolio.
The once-darling, hedge fund favorite is now down 85% over the past year — despite Friday’s 9% jump. But Valeant has done more than take down itself. It’s “created a pricing umbrella” that almost all biotech CEOs are talking about behind the scenes, Cramer explained.
Valeant has made is so that other biotech companies can’t put through price increases on its drugs and treatments, which is crimping earnings growth and causing the valuations to fall.
The biotech industry remains impaired and stuck in a bear market, Cramer reasoned.
“You can’t touch them until the Valeant situation is resolved,” he added. Investors need to know the earnings situation, they need quarterly reports. Is Valeant losing money? Making money?
No one knows, and that’s a big part of the problem.
Until investors find the answers to those questions and until the presidential election is over, biotech will continue to get hit each time it rallies, Cramer concluded.
At the time of publication, Cramer’s Action Alerts PLUS had no position in companies mentioned.
Comments
Have fun. Don't be mean. Feel free to criticize ideas, not people. Report bad behavior.
No one has shared their thoughts yet.
Leave a comment so your voice will be heard first.