Yesterday’s headline-making news that Canadian pharmaceutical company Valeant is in a bit of a precarious situation produced a 50% drop in the stock and some serious relative underperformance in our point-and-figure charting:

image

Given the tendency of stocks in the same sub-industry to move in similar fashion, we thought it might be useful to take a look at the group in order to gauge whether or not this is merely an outlier or a bonafide leader– in other words, how worried should we be about the pharmaceutical sub-industry (a group that has returned more than 92% over the last four years)?

DM Americas

image

image

image

image

image

image

image

image

image

image

image

DM Asia

image

image

image

image

image

image

image

image

image

image

image

image

image

image

DM EMEA

image

image

image

image

image

image

image

image

image

image

image

With a few exceptions (Johnson & Johnson, Taisho, Novo Nordisk?), the bulk of this group– across all developed markets– appears headed for more challenging times. Most of the constituents here are at and/or testing various measures of technical support (Lilly, Astellas, Roche?), if they are not in the beginnings of a downtrend already (Perrigo, Santen, Shire?).

Has an important leader in the outperformance of counter-cyclicals abdicated its position? The outlook appears decidedly less optimistic than it did just six months ago.

image