So much for health care being recession-proof.
From pharmaceuticals to drug developers to medical-device companies to health insurers, the health-care industry has been rocked this year -- in many cases, more than other industries. Here's a sampling of how bad things got this year:
Company |
Category |
Decrease (YTD) |
---|---|---|
Intuitive Surgical |
Medical instruments |
(63%) |
Pfizer |
Big pharma |
(19%) |
Exelixis |
Biotech |
(46%) |
UnitedHealth Group |
Health care services |
(56%) |
Source: Morningstar. Returns through Dec. 29.
But not every health care company got pummeled by investors in 2008. Let's take a look at some of this year's winners and see if their lofty ventures can continue into next year.
Diagnosing the results
First off, two diagnostic test makers are up on the year, but for entirely different reasons.
Myriad Genetics
The other half of Myraid is on fire. Sales of its genetics tests were up 52% year over year in the most recent quarter, and the company launched a new test last week to check the status of PTEN, which has been implicated in causing resistance or sensitivity to different cancer treatments.
Fools interested in just the molecular diagnostic part of Myraid, without the money-sucking drug development half, are in luck. The company announced earlier this year that it plans to split in two.
Sequenom
As long as results from the larger batch of samples follow the same trend as the early results, next year's launch should result in another successful year for Sequenom.
Approved for higher returns
Genentech
Amgen
Amgen's share price strength might also come from the possible bottoming out of falling sales of its anemia drugs. Last quarter, sales of Aranesp were down just 8% (at constant currencies and excluding returns), versus a drop of 29% in the first quarter. And sales of Epogen were actually up 5% in Q3 year over year, compared to a drop of 11% in Q1.
More of the same in 2009?
My crystal ball is in the shop, so I'm having trouble determining whether health care will rebound in 2009. I do know that many companies are trading well below where they usually trade based on earnings and free cash flow. That's not likely to continue forever, but it's a little hard to predict when the industry might turn around.
And even in the most down years, there will always be standouts. That's just the nature of drug development.