Health and Healthcare

Major Pharma Sees Tremendous Rise in Short Interest

Chris Lange

Published: February 28, 2019 8:30 am

Last Updated: January 31, 2020 12:09 am

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 White House has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It is yet to be seen how much headway it actually can make with these reforms.

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

Short interest in Pfizer Inc. (NYSE: PFE) increased massively to 155.95 million shares from the previous 42.75 million. The stock was trading at $42.93 Thursday morning, within a 52-week range of $34.32 to $46.47.

The number of Merck & Co. Inc. (NYSE: MRK) shares short rose to 40.59 million from 34.56 million in the previous period. Its shares were trading at $80.62, in a 52-week range of $52.83 to $81.29.

Bristol-Myers Squibb Co. (NYSE: BMY) short interest jumped to 60.97 million shares from the previous reading of 57.53 million. Shares traded at $50.96, in a 52-week trading range of $44.30 to $68.22.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased to 22.19 million from the previous 25.31 million. The stock was trading at $79.41, and its 52-week range is $75.77 to $121.45.

Eli Lilly and Co.’s (NYSE: LLY) short interest increased to 35.27 million shares from the previous 28.03 million. The stock was trading at $125.68. The 52-week range is $74.51 to $126.48.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest decreased to 23.48 million from the previous level of 24.52 million. Shares were trading at $17.00, in a 52-week range of $14.59 to $25.96.