Pfizer Inc. (PFE), Johnson & Johnson (JNJ): Is Obamacare a Disaster Waiting to Happen for Big Pharma?

The stocks for several big pharma companies have done quite nicely since the original passage of Obamacare in 2010. Shares in Pfizer Inc. (NYSE:PFE), for example, are up nearly 60%. J&J’s shares climbed more than 20% during the same period. Eli Lilly & Co. (NYSE:LLY) is 49% higher than before the bill was signed into law.

However, I wouldn’t bet the farm that big pharma will thrive under Obamacare. There are still plenty of unknowns on how the landscape will ultimately change. Some companies, particularly Lilly, face the even greater threat of continued revenue loss as blockbuster drugs go off patent.

Obamacare will certainly help several parts of the pharmaceutical industry, though. With increased focus on controlling costs, generic drugmakers should do well. Mylan Inc. (NASDAQ:MYL) looks to be a good pick in this group. It shares have jumped nearly 34% since the legislation passed. Biotech companies that specialize in drugs that are more resistant to price controls should also outperform. Celgene , for example, makes several cancer drugs for rare diseases and can set its prices much higher than many drugs on the market. The stock has gained nearly 74% since Obamacare’s passage.

Will Obamacare be disastrous for big pharma? I don’t think so. Will it provide a huge bonanza? I doubt it. I’m neither apocalyptic nor euphoric about the impact of Obamacare on big pharma. The $80 billion in new taxes and fees over the next decade is significant but won’t wreck the industry. There could be a boom of new drug spending, but it will likely be largely skewed toward generics. My hunch is that big pharma might have gotten a better return on that $150 million spent on promoting Obamacare from another investment — like maybe developing new and improved drugs. 

The article Is Obamacare a Disaster Waiting to Happen for Big Pharma? originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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