Healthcare has settled back into its normal late summer routine, with relatively little in the way of new product introductions or other market-moving data. That's not to say that the space is entirely quiet, though, as business continues to go on.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Novo Continues to Drive One of the Greatest Growth Stories in Healthcare
Very few healthcare stocks are as expensive as Novo Nordisk (NYSE:NVO), but few companies deserve that sort of premium either. There aren't too many companies with multiple billions of dollars in revenue that are growing more than 20%, but Novo is managing to do so largely on the strength of its diabetes franchise. Novo Nordisk stands tall alongside Lilly (NYSE:LLY) and Sanofi (NYSE:SNY) in the insulin space, while its Victoza remains a leading pharmaceutical option for Type 2 diabetes.

While the FDA approval timeline for a new insulin product has slipped a bit, and the company does face a potentially rejuvenated competitor now that Bristol-Myers (NYSE:BMY) and AstraZeneca (NYSE:AZN) have completed the deal for Amylin and its long-acting Bydureon (a direct competitor to Victoza).

Another Alzheimer's Drug Fails
Last week, Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE) announced that they were more or less pulling the plug on their drug bapineuzumab for Alzheimer's. Not only did the companies announce a second Phase 3 trial failure, but also the companies are no longer intending to develop IV bapi any further. While an earlier stage Phase 2 subcutaneous trial continues, there is no particular reason to believe that this drug has any prospects in the treatment of mild-to-moderate Alzheimer's.

This news also increases the pressure on Lilly with its own Alzheimer's drug solanezumab. Prior to Phase 3 data from J&J and Pfizer, most analysts had assigned a higher probability of success to bapineuzumab than solanezumab, but the latter drug is a larger component of Lilly's potential pipeline revenue. In other words, Lilly's odds are worse but its needs are greater.

SEE: Investing In The Healthcare Sector

New Developments
Investors saw the week of August 13th start off with news that Sun Pharmaceutical and Taro Pharmaceutical (NYSE:TARO) managed to find common ground on a deal. Sun already owned two-thirds of Taro, but the company had rejected a prior offer of $24.50. With the offer hiked 60% to nearly $40 a share, though, Taro found a deal it could accept and will become wholly owned by Sun.

Pfizer is moving ahead with its asset monetization plans, announcing the filing of registration documents for the IPO of Zoetis - its animal health business. While the IPO is only scheduled to raise about $100 million, it should allow Pfizer to pursue a gradual divestment strategy for a business with more than $4 billion in revenue. It's also worth noting that while animal health is a sizable market, most animal health businesses are locked up inside larger companies and Zoetis will be a rare pure play for investors.

SEE: What Is a Pure Play?

The Bottom Line
The performance of healthcare stocks (as measured by ETFs) has begun to falter a bit. The Health Care Select Sector SPDR (ARCA:XLV) is up 11.8% year-to-date, slipping below the the 12.2% return of the S&P 500. The iShares Dow Jones U.S. Pharmaceuticals ETF (ARCA:IHE) is up 14%, while the iShares Dow Jones U.S. Medical Devices ETF (ARCA:IHI) is up 10.7%. The SPDR Biotech ETF (ARCA:XBI) has risen almost 28% year-to-date.

At the time of writing, Stephen D. Simpson did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Hologic: An Activist Investment Analysis (HOLX)

    Read about a health care company that attracted activist investors Carl Icahn, Barry Rosenstein and Ralph Whitworth at the same time.
  2. Investing

    How To Make Sure Your Healthcare Costs Do Not Ruin Your Retirement

    The best proactive plan of action for a stable retirement is to understand medical costs, plan ahead, invest properly, and consider supplemental insurance.
  3. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  4. Personal Finance

    Zika Virus: Latest Advice on Staying Safe

    Zika has hit the U.S. Here’s a quick review of what’s known about the virus, how it spreads, who’s at highest risk and how to avoid it.
  5. Investing News

    Stryker Corporation: A Strong Capital Position

    A discussion on business operations, financials, valuation and growth trends for Stryker Corporation.
  6. Investing

    What Investors Need to Know About Returns in 2016

    Last year wasn’t a great one for investors seeking solid returns, so here are three things we believe all investors need to know about returns in 2016.
  7. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  8. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  9. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  10. Stock Analysis

    The Biggest Risks of Investing in Johnson & Johnson Stock (JNJ)

    Learn the largest risks to investing in Johnson & Johnson through fundamental analysis and other potential risks. Also discover how JNJ compares to its peers.
RELATED FAQS
  1. Does dental insurance cover implants?

    Dental implants have become a widely used procedure in dentistry. Despite their popularity, however, they tend to not be ... Read Full Answer >>
  2. Does dental insurance cover dentures?

    Most full dental insurance policies include some restorative coverage, usually meaning that up to 50% of the cost of dentures ... Read Full Answer >>
  3. Can CareCredit be used for family members?

    CareCredit has become a widely used option when it comes to paying for medical procedures, primarily procedures not typically ... Read Full Answer >>
  4. Can a Flexible Spending Account (FSA) be used for dental?

    Flexible Spending Accounts (FSAs) can be used to pay for dental expenses including deductibles and co-payments with pretax ... Read Full Answer >>
  5. Does dental insurance cover braces?

    Most regular dental plans cover little to none of the costs of braces. The primary focus of regular dental plans is prevention ... Read Full Answer >>
  6. Is dental insurance tax deductible?

    Dental insurance premiums may be tax deductible. To be deductible as a qualifying medical expense, the dental insurance must ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center