With the health care debate continuing, how can investors make money in the sector? Barbara Ryan, managing director and senior pharmaceuticals analyst at Deutsche Bank Securities, and Charles Boorady, health care providers analyst at Citigroup, shared their insights.
“Since before the 2008 elections, health care was a major campaign issue for both Obama and Clinton at the time,” Boorady told CNBC.
“Health care has been underowned for almost two years. When the reform is done, money will move back into health care that’s underowned and cheap.”
Boorady said he expects a lot of jostling next week, as the U.S. Senate tries to agree on some contentious issues.
“And while that is taking place, I expect stocks to be somewhat volatile,” he said.
“The hot-button issues are over whether the government should create its own health plan and that’s been pressuring the managed care stocks…Pharma seems to be the big winner here and coming out of the reform.”
In the meantime, Ryan said pharmaceutical stocks have seen “massive moves” upward, throughout the health care debate.
“For pharmaceuticals, the legislation has not been focused on taking a lot of money out there and the reason is that the market has done a great job with the large rise we’ve seen in generics,” she said.
"So generics now comprise about 70 percent of all pharmaceuticals. That’s been punishing for major pharmaceutical companies, which are now merging and lowering their cost structures.”
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Ryan does not own shares of PFE or MRK.
Boorady does not own shares of AET, MHS or MCK.