Large Cap Biopharma Fights the “Undertow” With Gains for the Week…Update-1…caution…..

Jul 13, 2025 | 2025 Rayno Biopharmaceuticals Portfolio, Biopharmaceuticals, Macro

7/15/25…caution on red tape today as all major biotech indices are down: ARKG off 3.7%, XBI off 2.8%. Dont see any news but sell-off  is broad. Could it be bond market weakness or CPI up 0.3%.

Large Cap Biopharma Stocks Shows Gains for the Week

  • Buying and holding 3- 4 biopharma stocks in 2025 beat the SPY up 6.41%, and the QQQ up 8.41%.
  • Administration policies affecting life science R&D and FDA staffing remain risks to growth; Tariffs and price controls are a major uncertainty.
  • Our bullish model for biotech assumes more deal-making and licensing between large caps and SMID biotechs.

Those of you who swim in the ocean certainly are familiar with the fears of  the “undertow” which refers to a rip current below the surface that moves in a different direction from any surface current possibly sweeping the swimmer away from the beach. With respect to the current market angst think of the “undertow” as a “tariff”  in a figurative sense. Tariffs roil the markets daily and optimists may think of them as short term policies but who knows?

Despite a grim backdrop in the healthcare sector large cap biopharma stocks eked out gains for the week. The XLV was down 0.23% for the week and 1.73% YTD.  Over the past month indeed healthcare trailed in the red as Technology soared over 6% followed by industrials and energy up over 4%. And it gets worse over six months with healthcare stocks dropping to the bottom down over 2% and over 7% for one year depending on what ETF or index you quote. We can blame UNH for much of the decline which at its peak was up to 30% of share of major funds and ETFs. You can cite Administration policies for the rest of the underperformance but Technology and AI so dominate the market  over the past year up over 12% in ETFs such as the XLK, SOXX and  QQQ, so any combination in tech holdings combined with the S&P 500 handily beats the market. So the upcoming earning reports and economic data in weeks ahead may  add clarity to the impacted of tariffs on specific sectors especially medical devices with its supply chain impact.

But we are still at an early stage with the TRUMP tariffs so it may take till the end of Q3 to fully understand the impact. And with pharmaceutical Industry tariffs still “in the weeds” how can we make forecasts? And with cuts in FDA and NIH combined with fewer people having  healthcare coverage like Medicaid how will that impact the device and survice sectors of healthcare.The IHI flat for the month but off its recent highs up 4.49% YTD. The IHF healthcare providers ETF was a huge performer over ten years but is now down 4 years in a row with he recent high in 2022 and now down 5.77% YTD, down 13.82% over one year and only 17.72% over 5 years whereas the S&P 500 is up 96% over 5 years.

But it was an up week for pharmaceuticals with many of our top picks gaining and even laggards perking up with Merck (MRK) up 3%, Regeneron (REGN) up 3.72% and Astra Zeneca (AZN) up 2.4% you be lulled into complacency. So can nibble into these growth/value trades with dividends backing you up where it not for the policy uncertainty. But for now we think the prospects look good as you can see from the data below and it also relates to our bullish posture on SMID cap biotechs. If the large caps are doing well financially and  tariifs become a short term issue they will be inclined to doing deals as in the case of Merck buying VERONA or even more active licensing deals among the smaller players.

Here a some notes on various stocks:

  1. The best performance  YTD are : GILD, VRTX and AMGN; over one ear its: GILD,ABBV and BMY.
  2. Short term performance can be monitored  by RSI (relative strength) and Analyst Recommendation and  of course Technicals.
  3. As financial parameters PEG, PE and P/S matter less at this point, as many stocks will look to be overvalued.
  4. The worst performers are making comeback at lest in the short term: REGN, MRK and PFE. It was worth waiting for Pfizer but the 7% dividend helped.
  5. Most of these stocks beat the biotech ETFS over one year: ARKG up 1.75% , IBB down 8.5% and XBI down 11.17%
  6. We trade ARKGX and XBI and hold small positions in pharmaceutical funds:  FBIOX, PPH down 4.95% YTD and
  7. Our top picks remain : ABBV, GILD, LLY and VRTX; but consider adding  AZN, LLY, MRK and REGN.

Significant News this Week

We will continue to monitor momentum in SMID Biotechs which is a major focus.

  • LONG ABBV, GILD, LLY, PFE, REGN, VRTX.
Analyst PRICE 52 wk
Top Biopharmas TICKER PICK TECH PEG Summ 2022 11/23 7/12/25 %YTD 1 yr % 1 mo.% high div % RSI % wk
Abbvie ABBV H/B U 5.38 1.87 161.64 138.59 192.45 8.3 13.27 0.5 219 3.53 57.28 1.67
Amgen AMGN H U 6.28 2.24 275 303 292.27 13.29 -9.17 1.19 347 3.27 55.95 -1
Astra Zeneca AZN H/B F 2.49 1.37 68 63.17 71.13 8.56 -8.74 -3.54 87.62 2.27 51.15 2.42
Bristol Myers Sq BMY H F 0.24 2.64 71.05 50.61 46.86 -17.15 15 -6.58 63.33 5.3 45 -0.13
Gilead Sci GILD H/B F/U 0.88 1.87 85.39 75.92 109.64 18.7 56.7 -0.31 120 2.96 49.22 -1.89
Eli Lilly LLY H/B U 1.57 1.53 447.71 597.71 793.01 2.72 -15.11 -1.93 972.53 0.79 55.87 1.58
Merck MRK H/B U 1.03 1.84 110.95 101.39 83.36 -16.2 -35.36 3.78 134.63 4.1 60.87 3
Pfizer PFE H/B U – 2.44 51.24 29.48 25.65 -3.32 -47.74 4.78 31.54 6.65 68.1 1.06
Regeneron REGN H/B U 10.55 1.74 725 798 567.74 -20 -47.44 9.48 1211 0.56 63.13 3.72
Vertex VRTX H/B U – 2.06 289 373.65 468.85 16.45 -4.73 3.63 519 0 43.68 2.01

 

 

 

 

 

 

 

 

 

 

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