Health and Healthcare

Major Pharma Short Sellers Couldn't Make Up Their Minds Before Failed Trump Health Care Vote

Chris Lange

Published: March 27, 2017 8:35 am

Last Updated: January 12, 2020 1:35 pm

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 Trump administration has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It has yet to be seen how much headway the White House can actually make with these reforms, especially after the House of Representatives failed to vote on Trump’s repeal of Obamacare.

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 15 short interest data have been compared with the previous figures, and short interest in most of these selected pharmaceutical stocks was mixed.

Short interest in Pfizer Inc. (NYSE: PFE) fell sharply to 89.05 million shares from the previous 110.37 million. Its shares were last seen at $34.00, within a 52-week trading range of $29.41 to $37.39.

The number of Merck & Co. Inc. (NYSE: MRK) shares short increased slightly to 17.37 million from 17.23 million in the previous period. Its shares were trading at $63.18, in a 52-week range of $52.44 to $66.80.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest rose to 21.87 million shares, compared to the previous level of 20.51 million. Shares were trading at $32.76, in a 52-week range of $31.90 to $58.16.

The sharp fall in Bristol-Myers Squibb Co. (NYSE: BMY) short interest was to 35.06 million shares, from the previous reading of 47.39 million. Shares were trading at $55.89, within a 52-week range of $46.01 to $77.12.

The number of shares short in AbbVie Inc. (NYSE: ABBV) increased to 35.74 million, compared to the previous 29.95 million. The stock was trading at $65.62, in a 52-week range of $55.06 to $68.12.

Eli Lilly and Co.’s (NYSE: LLY) short interest decreased to 9.35 million shares from the previous 12.15 million. The stock was trading at $84.18. The 52-week range is $64.18 to $86.14.