Macro Tsimmis

intelligently hedged investment

Vertex (VRTX) update #21—down sharply on Obamafear

Posted by intelledgement on Wed, 19 Nov 08

Shares of our biopharma company Vertex (VRTX) were hit hard today, down 11% in heavy trading, amid concerns that new Obama administration policies will hurt the profitability of the pharmaceutical industry. Biopharma indices in general were down 5% or more. There is speculation that the imperative to limit health care costs—in order to be able to afford universal coverage—will drive policies to scrutinize how drugs are administered, which could limit usage, and to subject reimbursement rates to cost-benefit analysis, which has been used in Europe to limit prices.

While health care reform in general is a top priority for the incoming administration, we continue to believe that hepatitis C is a big enough—and costly enough—public health problem to make it unlikely that they will adopt measures that would limit access to a treatment as effective as telaprevir appears to be. But the jury is still out and the charge sheet is full, as summarized in this street.com article (Vertex in particular is mentioned on page 4). This situation needs continued attention.

Previous VRTX-related posts:

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