Pharmaceutical companies usually are involved in a lengthy process of getting their drug candidates to market through clinical trials. There is a fair amount of risk involved, should a study come back negative or a candidate not be approved. Conversely, if a drug gains FDA approval or passes a clinical trial, there can be big upside.
The White House has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It is yet to be seen how much headway it actually can make with these reforms.
Keep in mind that short sellers betting against big pharma are taking on an added risk. They have to pay out the ongoing high dividends on top of the cost of borrowing the shares.
The March 31 short interest data have been compared with the previous figures, and short interest moves in these selected pharmaceutical stocks were mixed.
Short interest in Pfizer Inc. (NYSE: PFE) shrank to 46.45 million shares from the previous 59.08 million. The stock was trading at $35.39 Monday morning, within a 52-week range of $27.88 to $44.56.
The number of Merck & Co. Inc. (NYSE: MRK) shares short increased to 18.26 million from 18.16 million in the previous period. Its shares were trading at $82.49, in a 52-week range of $65.25 to $92.64.
Bristol-Myers Squibb Co. (NYSE: BMY) saw its short interest fall to 27.44 million shares from the prior reading of 45.17 million. Shares traded at $58.91, in a 52-week trading range of $42.48 to $68.34.
The number of shares short in AbbVie Inc. (NYSE: ABBV) increased to 84.64 million from the previous 81.62 million. The stock was trading at $79.75, and its 52-week range is $62.55 to $97.86.
Eli Lilly and Co.’s (NYSE: LLY) short interest decreased to 9.80 million shares from the previous 11.03 million. The stock was trading at $145.73. The 52-week range is $101.36 to $147.87.