Drug Company, Medical Stocks Could be ‘Refuge’ for Investors
With U.S. markets opening today for the first time since last Tuesday's terrorist attacks, shares of medical device and pharmaceutical makers may be a "refuge" for investors, Bloomberg News/Contra Costa Times reports. Analysts say that regardless of the direction of the "broader economy," larger drug makers -- Pfizer Inc., Merck & Co., Johnson & Johnson -- tend to post "steady" profits. To gauge how the market will react to the attacks, investors are looking to trading in Europe and Japan. In London trading, shares of GlaxoSmithKline have risen 11% since Tuesday and shares of AstraZeneca increased about 9%. David Saks, chief investment officer of Saks Medscience Fund, said, "Health care will probably be one area where people will feel is the least adversely affected in terms of economic impact." However, analysts say biotechnology stocks may fall when the U.S. market reopens today, as "skittish investors" may be unlikely to risk capital for "development-stage ventures." Saks said, "Biotech is synonymous with aggressive growth, high-potential growth and high risk. While the future looks bright for biotech, money will be reluctant to go there."
Since the attacks, private insurers and government health programs have "assured" patients and providers that they will reimburse them for emergency care. However, some insurers may "have to overcome the effects of the tragedy as claims rise for injuries," according to Laurel Gormley, an analyst at John Hancock Advisers Inc. She said that Oxford Health Plans, Cigna Corp. and Aetna Inc. are "of particular concern" because of the number of New York residents they cover (Richter, Bloomberg News/Contra Costa Times, 9/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.