Biotechnology stocks deepened their rout Friday, sinking more than 5 percent, and heading for their worst day since April 10, 2014, as fears continued to wrack the industry over pressure on drug prices.
The Nasdaq Biotech Index entered bear market territory, off 22 percent from its July high.
"As we started to get orders from our clients, they're saying, 'God, I don't want to sell these things, but I've got to take some off,'" David Seaburg, head of sales trading at Cowen and a CNBC Fast Money trader, said by telephone Friday. "It's the names that were up so much that people are using as a source of funds."
A pledge by Hillary Clinton earlier this week to put a stop to what she called outrageous price gouging in the specialty drug industry, coupled with a global outcry over one small company's 5,000 percent overnight price increase on a 60-year-old drug, have sent the Nasdaq Biotech Index plunging.
"There's the fear of the sector losing its pricing, which is a pillar of why this sector is on fire," Seaburg said. "It's out there in a sector that's overheated."
Biotech names getting the most clobbered Friday included gene therapy company Bluebird Bio, down 12 percent; cancer company Seattle Genetics, down 11 percent; and liver disease company Intercept Pharmaceuticals, down 9.7 percent. Among the biggest names, Gilead Sciences was down more than 2 percent, Amgen 3 percent, Biogen nearly 4 percent and Celgene more than 5 percent.
The moves are "just a freak out," said Robert W. Baird analyst Brian Skorney. "When consensus sees valuation as high but folks are positive on news flow, some negative news flow causes people to freak out."
Overall, biotech fund outflows totaled $416 million in the week through Wednesday, according to a Friday note from Raymond James. That amounted to a 0.61 percent decrease in assets, in the fourth week of outflows in the past seven.
"I'm not hearing that there's a thematic or fundamental change here," Seaburg said. "This is absurd; it's setting up as one of the best buying opportunities into year-end and people are going to look back and say, 'Why didn't I take advantage of that?'"