With only a few hours left in 2016, I thought it would be time to reflect and see how some select pharmaceutical names did in 2016. Overall, if we use the Health Care Select SPDR (XLV) as a proxy for the entire sector, 2016 could be a year to forget. The XLV was down a little over 4% versus the S&P 500, which is up almost 10% for the year. Obviously, some names did far better, and some did far worse. 

 JNJ   $           102.72  $            115.65 12.59%
 S&P 500             2,043.94             2,244.57 9.82%
 PFE   $             32.28  $              32.55 0.84%
 XLV   $             72.03  $              69.06 -4.12%
 GSK   $             40.35  $              38.62 -4.29%
 LLY   $             84.26  $              73.39 -12.90%
 AGN  $           312.50  $            210.33 -32.69%

If we take a look at few of the select large pharmaceuticals, the best performing of the group was Johnson & Johnson (JNJ), up about 12.50%, besting the XLV and S&P 500. After that, breaking even on the year seemed to be hard to do. Pfizer (PFE) limped its way in to positive territory for the year, barely, up less than 1%.  

Allergan (AGN) was the worst performing of the group, down nearly 32%. It could have been even worse for AGN, as shares have rallied in the past week off of its 52-week low of around $185. Allergan shares have gained nearly 13% off their low set on November 23rd. Shares languished around the $185 to $190 level until December 23rd, when the stock started showing some signs of life. 

2016 wasn't great for pharmaceutical companies mostly because of one significant overhang: drug prices. Drug prices was a carry over from the fourth quarter of 2015 when we started hearing more about companies significantly raising the prices on medicine. Then if widespread public backlash wasn't enough, the issue got thrown into the center of a Presidential election. 

It is not clear yet, how the new Trump administration will deal with drug pricing, but it will be something to pay attention to in 2017. After observing some of his recent actions, it is my belief President-elect Trump may try to bring down drug prices by increasing competition. Perhaps that comes from speeding up the time it takes for generics to get approved. I can't see the new President putting a cap on price increases, or see him messing with patent law. 

If the drug price issue is finally dealt with, and comes in the form of increased competition, it will be a win-win for consumers and investors as investors' worst fears will likely be put to rest. If this is the road President Trump takes, then 2017 should be a better year for drug companies. 

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