What's Behind The Biotech ETF Rally To Start 2019?

This year, biotech stocks have seen their CELG at the beginning of 2019 has set the space on fire. Bristol-Myers has offered $74 billion to take over Celgene.

Also, Eli Lilly and Company (NYSE:LLY) has announced that it will acquire Loxo Oncology for $8 billion to expand its oncology portfolio to precision medicines or targeted therapies. The winning momentum started from December 2018, when Glaxo (NYSE:GSK) offered to acquire TESARO for almost $5.1 billion. With this deal, Glaxo will gain access to TESARO’s PARP inhibitor, Zejula, which is approved for ovarian cancer.

More Deals Ahead?

Heightened speculation about increasing consolidation in the cancer space is doing rounds. Analysts have predicted a sizable increase in merger and acquisition activity in both drugmakers and medical device corners in 2019 .

Needless to say, all these acquisitions have acted as a cornerstone in the industry. EPZM and Blueprint Medicines (LON:BPM) have been on a tear this year.

Eli Lilly’s chief executive officer affirmed its desire to ink more deals in the areas of cancer, neuroscience and immunology . Investors should note that biotech giants are cash rich and can pay rich premium if they eye any specific company, per Bloomberg. Gilead Sciences (NASDAQ:GILD) , Biogen (NASDAQ:BIIB) , AbbVie (NYSE:ABBV) and AstraZeneca (NYSE:AZN) can act as potential acquirers down the line.

Success Story Beyond Cancer

While researches and approvals have been solid in the oncology space, the other areas have also held strong. on its treatment for postpartum depression .

Upbeat Zacks Rank

The IVV .

Any Roadblock Ahead?

While momentum is pretty strong and is likely to stay the same ahead, the ongoing U.S. government shutdown could play foul. There are products in the pipeline awaiting review at the U.S. Food and Drug Administration and the shutdown is not helping, as quoted on Bloombergquint. However, even if there is a short-term lull, the momentum should pick up once the impasse clears.

ETFs in Focus

Against this backdrop, investors may want to have a look at some of the wining biotech ETFs of this year.

Principal Healthcare Innovators Index ETF BTEC – Up 14.20%

Virtus LifeSci Biotech Products ETF (BS:BBP) – Up 14.0%

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VanEck Vectors Biotech ETF (LON:BBH) – Up 13.4%

First Trust Amex Biotechnology Index (LON:FBT) – Up 13.4%

iShares Nasdaq Biotechnology ETF IBB – Up 12.7%

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Written By: Zacks Investment Research