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Stockwatch: Big Pharma And Big Biotech Are The New Black

This article was originally published in Scrip

Executive Summary

Unlike the temporary blips of the last year when pharmacy benefit manager Express Scripts Holding Corp. went to war with Gilead Sciences, Inc. on drug pricing, or Federal Reserve chair Yellen warned on the frothy valuations of early-stage biotech companies, this time it is different. Firstly it has lasted longer than previous pull-backs, secondly, like the stock market retrenchment that followed the tragedies of September 11 2001, there is no direct connection with life science stocks, and thirdly, the supposedly unrelated initiating factor – China's slowing economic growth and the bursting of its stock market bubble – was in temporary remission on Thursday and Friday last week but life science stocks still traded off on both days. This time I am afraid that the market means it and as generalists continue to rotate out of life sciences, there are reasons to believe that bigger is going to be better as the investors who are left focus on tangible investment attributes for a change.

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