Big pharmaceutical companies that signed on to President Obama’s health-care overhaul a few years ago wound up benefiting from what was early on viewed as a Faustian sacrifice on their part. Now, as the Supreme Court prepares to announce its decision on the constitutionality of the Affordable Care Act, some wonder what that would mean for drug companies.
“I think fundamentally there’s really no change and therefore no impact either way,” said Barbara Ryan, senior pharmaceutical analyst at Deutsche Bank Security. “The long-term implication is that we go back to the sausage factory. There’s no question that health care in this country has to be reformed. So you don’t know what’s going to come out on the other end.”
Ryan said the Supreme Court decision shouldn't be a focal point for investors.
“These stocks have been outperforming for the last three months" and they were "up massively last year in a difficult market," Ryan said. “They are going to generate the numbers, they are paying very high dividends. These stocks have extraordinary yield support in the current environment.”
There's somewhat of a recovery in new product flow, which will also be a key driver for the sector, she said.
"We like the sector relative to the market," Reynolds said. Given the shaky state of the global economy, pharmaceuticals are "probably a relatively good place to be." Though, if you're bullish on the economic recovery, she added, "this would not be the place to be."