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Looking for a safe harbor during the Covid-19 pandemic? The biotech and pharmaceutical industries deserve a close look, according to SVB Leerink analyst Geoffrey Porges.<\/p>\n
The indexes that track the biotech and pharmaceutical sectors outperformed the market in the 2001, 2008-09, and current recessions, he wrote in a Friday morning note.<\/p>\n
On average, the biotechnology Indexes declined -1% during the three economic downturns, compared with the pharmaceutical indexs -10% and the S&P 500 indexs -20%. On a relative basis, biotech and pharmaceutical Indices outperformed the S&P 500 by 18% and 10%, respectively, Porges noted.<\/p>\n
One likely explanation: People need their medicine, even in a recession. Porges cited published papers showing that pharmaceutical sales volume stayed steady in the U.S. during the 2008-09 recession.<\/p>\n
So far this year, biotech indexes and exchange-traded funds have vastly outperformed the market. While the S&P 500 is down 13.4% since the start of the year, the iShares Nasdaq Biotechnology ETF (ticker: IBB) is up 2.2%. The SPDR S&P Biotechnology ETF (XBI) is down 1.4%, while the Nasdaq Biotechnology Index (NBI) is up 2.3%.<\/p>\n
Pharmaceutical indexes have also performed well. The NYSE Arca Pharmaceutical index is down 1.1%, while the S&P 500 Pharmaceuticals index is down 0.5%.<\/p>\n
Those performances have been boosted by strong showings from large-cap biotech companies like Gilead Sciences (GILD), which is up 19.7% so far this year on excitement over its experimental Covid-19 therapy remdesivir, and Moderna (MRNA), which is up a startling 142.5% so far this year over its Covid-19 vaccine, which is in clinical trials.<\/p>\n
Major pharmaceutical companies have also outperformed. Johnson & Johnson (JNJ) is up 6.6%, while Eli Lilly (LLY) is up 21.7%. The company clocked a new 52-week high on Friday morning.<\/p>\n
Porges note suggests that all this tracks with the recent history of recessions.<\/p>\n
Our analysis of historical recessions suggested that the biotech and pharma indices (and stocks) significantly outperformed the broad market (S&P 500), despite the greater P\/E multiple compressions in the healthcare indices, he wrote.<\/p>\n
The iShares Nasdaq Biotechnology ETF was up 0.6% in recent trading, while the S&P 500 was up 0.4%.<\/p>\n
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com<\/a><\/p>\n <\/p>\n Link: Text size Looking for a safe harbor during the Covid-19 pandemic? The biotech and pharmaceutical industries deserve a close look, according to SVB Leerink analyst Geoffrey Porges. The indexes that track the biotech and pharmaceutical sectors outperformed the market in the 2001, 2008-09, and current recessions, he wrote in a Friday morning note. Continue reading
\nBiotech and Pharmaceutical Stocks Beat the Market in Recessions - Barron's<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"