Dissipate the Risk In Biotechnology With ETFs

The biotechnology sector offers investors the opportunity to bet big and win big, but the potential downside can make a huge dent in your wallet. Perhaps a biotech exchange traded fund (ETF) is more to your liking?

The largest and most liquid broad-based biotech sector iShares Nasdaq Biotechnology (NASDAQ: IBB), which reflects the performance of the Nasdaq Biotechnology Index, offers the opportunity to gain exposure to biotechs while mitigating the risk from picking out potential duds in the sector, comments Jim Woods for InvestorPlace.

Often, big moves in biotech stocks come from successful stages of drug development. The biggest risk is that one unsuccessful stage, which sends a company back to square one. The biggest reward is approval, of course. [Play the Booming Biotech Sector With ETFs.]

If you believe the sector will be up or down in the short-term, consider ProShares Ultra Biotechnology (NYSEArca: BIB) or ProShares UltraShort NASDAQ Biotechnology (NYSEArca: BIS) to capitalize on quick moves.

If you want to play it straight, then there are these in addition to IBB:

• SPDR S&P Biotech ETF (NYSEArca: XBI)
• First Trust Amex Biotech (NYSEAca: FBT)

This year is shaping up to be a good one for biotech companies.

• The sector has been awash in big mergers. Back in August, Sanofi-Aventis (NASDAQ: SNY) made a $69 a share offer to acquire a troubled Genzyme (NASDAQ: GENZ) with a poor track record, but now, a few bullish Genzyme analysts estimate $80 a share is more suitable, reports Brett Chase for Minyanville.  [Deal-Making Drives ETFs Higher.]
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• Demand for pharmaceuticals has stayed fairly consistent, even through the recession. Emerging market demand is expected to help pick up any slack.

Disclosure None

Why Cancer Research Could Benefit Pharma ETFs

Billions of dollars are being poured into cancer-fighting drugs. But it’s not just to find a cure – it’s also to gain market share in one of the most untapped markets, from a pharmaceutical standpoint. The related ETFs could benefit no matter which company discovers a drug first.

After largely ignoring the disease, virtually every large pharmaceutical company seems to have discovered cancer now that more about the disease is known. A substantial portion of the smaller biotechnology companies are focused on it, as well. Combined, the two industries are pumping billions of dollars into the development of drugs to fight off the disease, reports Andrew Pollack for The New York Times.

Two industry trends are pushing the move:

• Recent scientific discoveries have suggested new targets for cancer drug researchers to attack
• Drug companies are experiencing declining profits from staple drugs such as Lipitor; the high prices that cancer drugs can command are proving to be alluring
• Cancer patients are often desperate for drugs while insurers could face outrage if they denied payments, so drug makers can charge hefty sums for medicines – even those that don’t work very well

Gardener Harris for The New York Times reports that a settlement has been reached regarding the pharmaceutical giant Pfizer (PFE) over the company’s illegal promotion of its now-withdrawn painkiller, Bextra. The $2.3 billion fine is the largest-ever levied for Medicare and Medicaid fraud, and the agreement also includes some promotional practices involving other Pfizer drugs — Zyvox, Geodon and Lyrica.

• PowerShares Dynamic Pharmaceuticals (PJP): up 3.9% year-to-date



• iShares Dow Jones U.S. Pharmaceuticals (IHE): up 10.2% year-to-date



• SPDR S&P Pharmaceuticals (XPH): up 8.7% year-to-date






Disclosure I am long PFE shares.

US government to pay for Swine flu vaccine campaign, My Picks Baxter International Inc.(BAX), GlaxoSmithKline plc(GSK)

The U.S. government will pay for any vaccination program against the H1N1 swine flu, and may encourage schools to help vaccinate children, Health and Human Services Secretary Kathleen Sebelius said on Thursday.

The government is also considering buying even more antiviral drugs, including more of GlaxoSmithKline's (GSK) inhaled drug Relenza and pediatric doses of Roche AG's Tamiflu, officials told a swine flu "summit" at the National Institutes of Health.

Sebelius said plans were on track for a mid-October vaccination program, and she urged states and territories to get plans in place now. It will likely run alongside the annual seasonal flu vaccine campaign and may include schools and other non-traditional sites as vaccination centers.

"At mid-October we might have as much as 100 million doses of vaccine," HHS vaccine expert Dr. Bruce Gellin told the meeting.

My Favorite Medical Instrustment and supply company is Baxter International inc. (BAX)

Baxter International Inc. develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. The company operates through three segments: BioScience, Medication Delivery, and Renal.

The BioScience segment manufactures recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies, alpha 1-antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions; products for regenerative medicine, such as biosurgery products and technologies used in adult stem-cell therapies; and vaccines.

The Medication Delivery segment manufactures intravenous solutions and administration sets; premixed drugs and drug-reconstitution systems; pre-filled vials and syringes for injectable drugs, intravenous nutrition products; infusion pumps; and inhalation anesthetics. This segment also offers products and services related to pharmacy compounding, drug formulation, and packaging technologies.

The Renal segment provides products to treat end-stage renal disease and irreversible kidney failure. This segment also offers solutions and other products for peritoneal dialysis, a home-based therapy and product for hemodialysis, which is conducted in a hospital or clinic. Baxter International Inc. has collaborations with HHD LLC, DEKA Products Limited Partnership, and DEKA Research and Development Corp. for the development of a home hemodialysis machine.

It markets its products to hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices, clinical and medical research laboratories, and patients at home under physician supervision. The company was founded in 1931 and is headquartered in Deerfield, Illinois.

Disclosure I am long Both GSK and BAX in my healthcare folio. Currently I am up 17.56% year to date.