Health and Healthcare

Short Sellers Can't Make Up Their Minds on Major Pharma

Chris Lange

Published: April 26, 2017 8:25 am

Last Updated: January 12, 2020 12:38 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 April 13 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) fell sharply to 50.04 million shares from the previous 66.11 million. Its shares were last seen at $33.76, within a 52-week trading range of $29.83 to $37.39.

The number of Merck & Co. Inc. (NYSE: MRK) shares short fell to 16.67 million from 17.26 million in the previous period. Its shares were trading at $62.30, in a 52-week range of $53.06 to $66.80.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest rose slightly to 21.80 million shares, compared to the previous level of 21.48 million. Shares were trading at $30.76, in a 52-week range of $30.22 to $56.46.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest slipped just a little lower to 22.34 million shares, from the previous reading of 23.58 million. Shares were trading at $53.94, within a 52-week range of $46.01 to $77.12.

The number of shares short in AbbVie Inc. (NYSE: ABBV) increased to 33.32 million, compared to the previous 31.82 million. The stock was trading at $65.10, in a 52-week range of $55.06 to $68.12.

Eli Lilly and Co.’s (NYSE: LLY) short interest increased to 10.80 million shares from the previous 10.37 million. The stock was trading at $81.20. The 52-week range is $64.18 to $86.72.