Big Pharma Short Sellers Grow More Selective

By Chris Lange Updated Jan 30, 12:18PM EST · Published Dec 11, 9:45AM EST

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Big Pharma Short Sellers Grow More Selective — © Hiraman / Getty Images

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 November 29 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 | PFE Price Prediction) increased to 57.98 million shares from the previous 51.66 million. The stock was trading at $38.48 Wednesday morning, within a 52-week range of $33.97 to $44.90.

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The number of Merck & Co. Inc. (NYSE: MRK) shares short increased to 24.67 million from 21.79 million in the previous period. Its shares were trading at $89.10, in a 52-week range of $70.89 to $89.53.

Bristol-Myers Squibb Co. (NYSE: BMY) saw its short interest drop sharply to 97.22 million shares from the previous reading of 151.23 million. Shares traded at $62.09, in a 52-week trading range of $42.48 to $62.37.

The number of shares short in AbbVie Inc. (NYSE: ABBV) decreased to 68.40 million from the previous 70.93 million. The stock was trading at $86.56, and its 52-week range is $62.66 to $92.99.

Eli Lilly and Co.’s (NYSE: LLY) short interest increased to 10.55 million shares from the previous 10.22 million. The stock was trading at $120.65. The 52-week range is $101.36 to $132.13.

Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest was 67.67 million, down from the previous level of 70.33 million. Shares were trading at $9.49, in a 52-week range of $6.07 to $20.21.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.