Stocks in a number of medical industries historically have been considered defensive during market corrections or economic downturns. Consumers will cut out many other purchases, traditional thinking goes, before paring back their health care and drugs.
This view was tarnished a bit following the 2007-09 recession. Hard-hit consumers protected cash by avoiding medical treatment and drugs, leaving a broad swath of the health care complex in need of resuscitation.
Still, some select medical stocks share growth and defensive traits. Drug developers, particularly in the biotech space, are defensive because their drugs are increasingly aimed at patients for whom a specific drug or treatment is not optional.
They are also benefiting from the ongoing lapse of patent protection for traditional blockbuster drugs. Big pharma names are spending hard to restock their product pipelines.
This gives smaller drugmakers a chance to gain market share, as well as the possibility of being acquired or selling licensing rights to promising drugs.
The result may give five drugmakers on the IBD 50 list added resilience if the current correction becomes more serious.
Jazz Pharmaceuticals (JAZZ) has yet to form a second-stage base after clearing a first-stage pattern in May.
Valeant Pharmaceuticals (VRX) just cleared a second-stage, cup-with-handle base at 94.32.
Celgene (CELG) is testing 10-week support after clearing a second-stage base. Santarus (SNTS) is back for a third test of support following a July breakout past 24.10.
Biogen Idec (BIIB) has been struggling since May and is in its third week below 10-week support.