Wouldn't it be nice to know exactly how the health care bill will
affect pharmaceutical companies? Since we don't, let's take a look
at the state of the biomedical sector and how related exchange
traded funds (ETFs) may perform.
Industry executives are sending mixed signals,
reports Carol Kopp of Minyanville
. On the one hand, they are making a ruckus about how the newly
minted health care bill will take a huge chunk out of future
earnings. Bristol-Myers Squibb said that 2010 earnings will be cut
by $0.12 a share, or $300 to $400 million in revenue. [
Biotech ETFs to Watch.
On the other hand, according to
The New York Times
, the industry spent $100 million lobbying for health reform.
Complaints aside, the expansion of health care will bring in 32
million uninsured people. That's potentially 32 million more
prescriptions that the pharmaceuticals can sell. The question is,
which side will win the tug-of-war on earnings growth? [
What to Look for in Health Care ETFs.
Kopp thinks that global growth will be the engine that drives
the biomedical sector to continued growth. Pharma products to
emerging markets are forecast to grow at 14 to 17 percent over the
next five years, with China becoming the third largest market
behind the United States and Japan.
In summary, Kopp thinks that the expansion of health care in
addition to global growth will be more than enough to offset the
costs incurred by biomedical companies.
For more stories on the health care bill, visit our
health care category
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Sumin Kim contributed to this article.