Gloom lifts over pharmaceutical sector

Healthcare companies look attractive as a long term investment because of the positive influence of demographic trends. Despite the fact that in October the MSCI Healthcare index slightly underperformed the MSCI World index the sector offered some good news.

Fernando Luque 7 November, 2002 | 4:29PM
The behaviour of the big pharmaceutical shares varied widely over the last month. For example, Merck’s share price rose 19% compared with a loss of almost 1% for GlaxoSmithKline. This shows how heavily the performance of funds in this category relies on their individual portfolio holdings.

Many healthcare firms announced third quarter earnings’ figures in October. Highlights included a 19% gain in third quarter profit for Johnson & Johnson and a lower year-on-year third quarter profit for Merck. Both results were in line with analysts’ expectations.

The biotechnology subsector had a good month with the Nasdaq Biotech index gaining 10%. For some experts the sector had reached an attractive valuation level after the sharp sell-off in June and July.

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Fernando Luque

Fernando Luque  es el Senior Financial Editor de www.morningstar.es

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