The health care sector is critical to the health and well-being of the almost 330 million people who live in the U.S. And access to good medical care has contributed to the increase in the average American’s life expectancy over the last several decades. But this sector is also essential to the economy, employing millions of people and making up almost one-fifth of the total economic output of the U.S.

What is the health care sector?

In 2019, Americans spent a total of $3.8 trillion on health care, or $11,582 per person, an increase of 4.6% from the previous year. Health care spending accounts for 17.7% of the Gross Domestic Product (GDP) of the U.S. One of the biggest employers in the country, this sector employed 20.5 million people, culminating in a payroll of more than $1 trillion.

The health care sector in the U.S. includes many different industries and businesses that work together to provide medical care to people: 

• Companies that manufacture medical equipment— everything from scalpels to MRI machines—are part of this sector. The leading businesses in the medical equipment industry are Medtronic, with a revenue of $28.91 billion, Johnson & Johnson with $25.96 billion in revenue, and Abbott Laboratories with a revenue of $19.95 billion.
• The health care sector also includes pharmaceutical companies that make the prescription drugs needed to treat cancer, diabetes, depression, and more. Brand name pharmaceutical manufacturing is a $205 billion industry, led by AbbVie, Bristol-Myers Squibb, Johnson & Johnson, Merck & Co., Amgen, and Pfizer.
• There are hundreds of biotechnology companies in the U.S. that produce medicines, therapeutic treatments, and other medical products through the development of biological and chemical processes. Biotech firms are responsible for a great deal of the innovation in the health care industry, experimenting with new treatments for illnesses. Biotech companies such as Moderna, Novavax, and Gilead have been at the forefront of the development of vaccines and treatments against Covid-19. In the U.S., the biggest biotech companies by market capitalization are Moderna ($66 billion), Vertex Pharmaceuticals ($56.4 billion), and Regeneron Pharmaceuticals ($55 billion). 
• Health care facilities and professionals are critical to the health care sector. There are more than 6,000 hospitals throughout the U.S. and consumers spend more than $1.2 billion on those facilities annually. 

Regulation in the health care sector

Health insurers are also important to the health care sector in the U.S. The health insurance industry is a $1.1 trillion market, growing 5.1% on average per year between 2016 and 2021. Health insurance is intended to protect you from incurring massive, unplanned costs from your medical treatment. 

About half of Americans receive health care coverage from private insurers through their employer, according to a 2019 survey from Kaiser Family Foundation. (More than one-third self-purchase government insurance, and the remainder are uninsured. See graphic below.) The largest providers of medical insurance in the U.S. are UnitedHealth, Anthem, and Humana. For those people who don’t receive health care coverage through work, the 2010 Affordable Care Act was created to help make coverage more affordable and accessible.

*Source: Kaiser Family Foundation, 2019

Both state and federal agencies, including the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), the Department of Health and Human Services (HHS), and  the Centers for Medicare & Medicaid Services (CMS), regulate the industry to help maintain fair costs and good care for patients.

Since the late nineteenth century, there has been a push to create a public option for medical insurance subsidized by the federal government. Proponents of this movement support universal health care, which would aim to provide the same coverage to all Americans at the same cost. In recent years, politicians such as Senators Elizabeth Warren and Bernie Sanders have thrown their weight behind the movement for Medicare for All, which aims to expand the public option to include all Americans. Opponents of the movement have argued that Medicare for All could further complicate the health care system in the U.S., and prevent people from getting the care they are used to receiving.

Investing in the health care sector

You might decide to invest in the health care sector for a number of reasons. Health care is a necessity for everyone, and the demand for things like equipment and prescription drugs is consistent. Additionally, the health care sector is the second-largest one in the S&P 500.  Adding health care investments to your portfolio can help you diversify. 

Health care stocks tend to be defensive, meaning that they deliver consistent results regardless of how the economy is performing, since people always need health care. For example, as of April, 2020, the health care sector fell only 18% from February 19, 2020 as a result of the pandemic, while the rest of the S&P 500 dropped 27%. 

Still, all investing involves risk, and this sector is no exception. Because the health care industry is heavily regulated by the government, any changes to policy related to health care can affect the performance of those stocks.¹ Additionally, biotech stocks can be volatile, and therefore risky for investors. 

When investing, remember to follow the Stash Way® by investing small amounts of money regularly in a diversified portfolio. Diversifying your portfolio with investments across several different sectors can help protect you from taking on too much risk. With Stash, you can invest in single stocks of health care companies like Abbvie, UnitedHealth, Moderna, and more.² You can also invest in ETFs that include health care companies.

The post How the Health Care Sector Provides Essential Services, and Powers the Economy appeared first on Stash Learn.

As of August, 2020, Covid-19 has infected more than 19 million people and killed more than 700,000 worldwide. In the U.S. alone, more than 160,000 people have died from the virus. Additionally, the pandemic has caused turmoil in the U.S. economy, as businesses have closed temporarily and in some cases, permanently. Meanwhile, biotech and pharmaceutical companies are working at a rapid pace to test a vaccine as well as potential treatments for the virus, in the hopes that people and businesses can safely function again. 

In the U.S., the federal government is providing approximately $10 billion in funding as part of Operation Warp Speed, a partnership between the public and private sectors to manufacture 300 million doses of a Covid-19 vaccine by January, 2021. This funding has gone to seven biotech and pharmaceutical companies, including Moderna, AstraZeneca, and Johnson & Johnson. In exchange for government funding, these companies will have to hand doses of their vaccine to the U.S. once approved.

Development, testing, and production of vaccines typically lasts two to three years. But with more than 700,000 people dead across the world from the virus, scientists are attempting to bring a vaccine to market by 2021. 

The companies that are part of Operation Warp Speed aren’t the only ones working on a vaccine. In fact, there are currently 165 vaccines in development and testing all over the world. In what appears to be a potential propaganda push, Russian researchers sped through the trial process and will reportedly begin vaccinations across the country in October, 2020. However, the World Health Organization has not included the Russian vaccine in its list of contenders. 

Still, an effective and approved vaccine isn’t expected before the end of the year. Whichever company does bring an effective vaccine to market first is likely to be met with very high demand from every corner of the world.

Where the vaccine race stands

Once researchers have a vaccine, they have to test it in the lab, on animals, and eventually on people in three separate phases. During phase 1, the vaccine is tested on a small number of people to see if the vaccine is safe and to determine the dosage needed. When the vaccine moves on to phase 2, it’s tested on hundreds of people from different age groups to see how its effects might differ. Lastly, the vaccine enters phase 3, in which it’s tested against a placebo in tens of thousands of people. Then, the vaccine can be approved for use. 

Here’s the status of some of the many companies—both large and small—working on a vaccine:

• Biotech company Moderna entered phase 3 of testing in July, 2020, administering the vaccine to 30,000 people. Moderna initially got $483 million in April, 2020, and then an additional $472 million from the U.S. government to work on the vaccine in collaboration with the National Institute of Health. Moderna reported that test subjects developed antibodies to the virus. The company reportedly hopes to deliver its vaccine in 2021 and to manufacture 500 million doses annually. 
• Pharmaceutical company Pfizer developed four different vaccine possibilities and has moved into the third phase of testing with one vaccine it developed with German company BioNTech. Pfizer’s vaccine will also be tested on 30,000 volunteers. Pfizer anticipates having news regarding the third phase in October, 2020. The U.S. gave Pfizer $1.95 billion dollars anticipating that the company will bring 100 million doses of the vaccine to market by December, 2020. 
• The U.S. Department of Health and Human Services allocated $500 million in funding to Johnson & Johnson’s vaccine production. The pharmaceutical company’s vaccine candidate has shown to protect monkeys from the virus, allowing Johnson & Johnson to move onto human trials. 
• Biotech company Novavax secured $1.6 billion in government funding to work on its vaccine. Novavax’s combined phase 1 and phase 2 trials reportedly showed antibody development in monkeys and humans. Novavax plans to deliver 100 million vaccine doses by the first quarter of 2021. 
• AstraZeneca is working with the University of Oxford to produce a vaccine and received $1.2 billion from the U.S. AstraZeneca has begun testing its potential vaccine on humans and phase 1 and 2 trials showed that test subjects developed antibodies. 

Any of the potential vaccines could fail or prove ineffective at any point in the trial phase. For that reason, investing in any of these companies could be risky.

How Covid-19 is being treated

The Food and Drug Administration (FDA) hasn’t approved any drug for treatment of the virus. The FDA did approve the antiviral drug remdesivir, which is made by Gilead Sciences, for emergency use during the pandemic. Gilead Sciences released findings in July that showed that remdesivir reduces the risk of death by 62% in severely sick patients, and reduced recovery time by about four days. However, more testing of the drug is still needed. 

Meanwhile, pharmaceutical company Eli Lily and biotech company Regeneron are testing antibody treatments to Covid-19. Eli Lily started testing its treatment in 2,400 nursing home patients and workers this month. Regeneron is also in the process of testing its treatment on patients who have the virus, as well as people who might have come into contact with it.

Investing in biotech and healthcare

The news surrounding potential vaccines and treatments is changing daily, and it’s likely to be front and center through the remainder of the year. 

Stash offers healthcare and biotech ETFs, which you can invest in. Stash also offers single stocks in healthcare and biotech companies. Keep in mind that investing in any industry comes with risk and that the biotech industry has historically been a volatile one.

Remember that diversifying your portfolio of investments is an important part of the Stash Way. And as markets continue to react to the outbreak of Covid-19, investing for the long term is the way to go.

The post The Race is on With These Companies to Find a Covid-19 Vaccine appeared first on Stash Learn.

While patients suffering from Covid-19 continue to flood hospitals, companies including Gilead Sciences, Moderna, and Sanofi, are racing to find solutions to three of the biggest issues at the center of the pandemic: inadequate testing, vaccines, and treatments. The coronavirus has infected more than 3 million people and caused more than 200,000 deaths worldwide. 

In addition to the health crisis caused by the virus, more than 26 million Americans have lost their jobs as companies have closed their doors in response to state and local stay-at-home orders. Markets have also experienced volatility in response to the virus’ spread since the end of February, 2020. 

Some experts predict small businesses such as restaurants to close permanently because of the financial losses they’re currently experiencing.

Included in the essential services that continue to operate are the people developing the science and technology to help stop the spread of the virus. Despite the turmoil in many industries, biotech and pharmaceutical companies have a unique opportunity to help find ways to slow the spread of the virus and treat patients.

Testing for the virus

Hospitals face a lack of adequate supplies of tests for the coronavirus. The Food and Drug Administration (FDA), a government agency that oversees the safety and efficacy of food and drugs, approved an at-home test kit from diagnostics company LabCorp on April 21, 2020. This kit would allow people to self-administer a nasal swab and send it to the lab for testing, without having to leave their homes. While LabCorp is initially offering the testing kits to first responders, the company intends to make the tests available to consumers for $119 soon.

In addition to tests for the actual virus, some companies are developing tests for the coronavirus antibody, which could identify people who had the virus but didn’t show severe symptoms.  A positive test for the antibody could indicate that a person is immune to the virus, at least for a period of time.

U.S. companies Biomerica Inc. and Chembio Diagnostics Inc., and South Korean company Sugentech Inc. started selling their own antibody tests outside of the U.S. Meanwhile, Roche AG, a Swiss pharmaceutical company, built testing kits for both the virus and for the antibody. 

When will a vaccine be ready?

Biotech and pharmaceutical companies all around the world are rushing to develop a vaccine for Covid-19. Development, testing, and production of vaccines typically lasts two to three years, according to Bloomberg. 

Researchers must test vaccines in the lab, on animals, and eventually on people. Because of how many rounds of testing vaccines need, it can still take 12 to 18 to get a vaccine on the market. Here are some of the companies–large and small–developing vaccines: 

• Biotech company Moderna is working with the National Institute of Allergy and Infectious Diseases on a vaccine. The company began its first phase of human trials in March, 2020 and expects to kick off its second phase of human trials later in the spring of 2020. Moderna received $483 million in funding from the U.S. government to continue its work on the vaccine.
• Big pharma company Johnson & Johnson reportedly plans to start clinical trials of a coronavirus vaccine. The U.S. Department of Health and Human Services allocated $500 million in funding to Johnson & Johnson’s vaccine production. 
• Biotech company Inovio Pharmaceuticals started its first phase of human trials, testing on 40 people with its vaccine.
• Biotech Novavax anticipates starting human trials of its vaccine in mid-May 2020. 

Treatments for the virus

Biotech and big drug companies are also hoping to develop effective treatments for Covid-19. Although the Trump administration has promoted a drug used to treat arthritis and malaria called hydroxychloroquine as a possible treatment for the virus, evidence seemingly doesn’t support that claim yet. 

Gilead Sciences entered the third phase of clinical trials of its antivrial drug called remdesivir on people who’ve contracted the virus. The company currently tests the drug on patients with moderate and severe cases of the virus but results of the tests are reportedly inconclusive.

Regeneron Pharmaceuticals and Sanofi to test a treatment for the virus called Kevzara, which was previously developed to treat rheumatoid arthritis. The companies started the next round of clinical trials of the drug on March 16, 2020. Roche Holding AG is also testing a rheumatoid arthritis drug for the treatment of the virus and is in the third phase of trials.

Other companies working on treatment testing include Amgen Inc, Adaptive Biotechnologies Corp, and CalciMedica Inc.

More on the biotech industry

The biotech industry has experienced a surge in mergers in recent years. New tax laws that have encouraged large pharmaceutical companies to “repatriate” cash overseas has given large companies the funds to buy small startups with promising new treatments, according to reports. 

Similarly, big pharma companies, many of which have lost patent rights for blockbusters like the statin Lipitor, the erectile dysfunction drug Viagra, and the pain relief medication Lyrica, may be looking to acquire smaller biotech firms with promising new drugs. 

Here are some examples: 

• Bristol-Myers Squibb acquired cancer drug developer Celgene in 2019 for $74 billion. (Celegene acquired Juno Therapeutics for $9 billion in 2018.)
• French company Sanofi said it would purchase U.S. drugmaker Bioverativ for $11.6 billion in 2018.
• F. Hoffmann-La Roche announced plans to acquire a gene therapy company called Spark Therapeutics for $4.8 billion in June, 2019. 

The healthcare industry is massive in the U.S., employing more people than any other. In 2017, the number of people working in health care surpassed the next two largest industries, manufacturing and retail.

In 2018, Americans spent $3.65 trillion on healthcare, more than in any other developed country in the world, according to Fortune.  And that spending is likely to increase 5.5% per year until 2027.

Keep in mind that investing in any industry comes with risk and that the biotech industry has historically been a volatile one.

Investing in biotech and healthcare

You can invest in the healthcare and biotech industries on Stash. Stash offers healthcare and biotech ETFs. Stash also offers single stocks in healthcare and biotech companies. 

Remember that diversifying your portfolio of investments is an important part of the Stash Way. And as markets continue to react to the outbreak of Covid-19, investing for the long term is the way to go.

The post How Biotech and Big Pharma are Racing to Find a Cure appeared first on Stash Learn.

As the coronavirus continues to spread, rattling the markets, things are heating up in the biotech world, where companies are racing to develop a vaccine to battle Covid-19, as the virus is known.

Since the outbreak started in Wuhan, China, in December, 2019, more than 194,000 people have contracted the virus, and more than 7,800 people have died. In the U.S., more than 5,700 people have been infected and more than 90 have died. The World Health Organization (WHO) has classified the outbreak of the virus as a pandemic.  

While a broad swath of companies including Apple, Microsoft, Nike, and Tesla have said the virus will potentially affect their quarterly earnings, the virus might actually benefit some biotechnology and pharmaceutical companies. Novavax, Inovio Pharmaceuticals, and Moderna are just three of the companies developing vaccines for the virus and are preparing to test them. 

How is the outbreak affecting the global economy?

The markets have tumbled since the outbreak started spreading in the United States at the end of February. .  The Dow Industrial Average and the S&P 500—the stock market’s main bellwether—fell into a bear market on March 11, 2020. A bear market is defined as a period when prices on an index fall 20% or more from a previous high, perhaps after a bull market. 

(The Dow is an index, or a measurement of the stock market and includes 30 of the largest publicly traded companies traded on the stock market. The S&P 500 is an index of the 500 largest companies by market cap in the U.S.) 

Stock indexes have fallen due to uncertainty surrounding the spread of Covid-19. The coronavirus has spread to 163 countries including Italy, Iran, France, the United Kingdom, and the United States. The CDC warned that Covid-19 is a serious threat to public health and that people should be on the lookout for symptoms of the coronavirus, which are similar to those of the flu.

Meanwhile, many businesses that operate in China have slowed down their activity. Apple closed all 42 of its Chinese Apple stores at the beginning of the outbreak. Car manufacturer Tesla also temporarily closed its factory in China. Meanwhile, coffee chain Starbucks and Scandinavian furniture design store Ikea both temporarily closed more than half of their Chinese stores, according to the New York Times. In the first two months of 2020, China’s industrial output declined by 13.5% and retail sales decreased by 20.5%, according to Reuters.

How is the biotech industry responding to the virus?

Despite this economic slowdown, Covid-19 has presented biotech companies with an opportunity to develop a vaccine. Amid the outbreak, Inovio, Moderna, and Novavax are springing into action.

These biotech companies are reportedly making vaccines by copying RNA from Covid-19. However, they can’t rush their new products to the market. The vaccines first need to be tested in the lab, on animals, and eventually on people. Because of how many rounds of testing vaccines need, it can take 12 to 18 months for a vaccine to be fully developed. 

Because of the severity of the outbreak, government agencies such as the National Institute of Health are fast-tracking potential treatments. On February 24, 2020, Moderna sent its Covid-19 vaccine to the National Institute of Allergy and Infectious Diseases, part of the U.S. Department of Health. Vaccine testing on people began on March 16, 2020.

Treatments for people who have already contracted the coronavirus are also in progress. Gilead Sciences is said to be testing an antiviral medicine on patients in China and the U.S. Regeneron is also said to be working on an antiviral treatment, and is said to be working with the government health agencies to test the drug. 

From 2002 to 2003, China dealt with a similar outbreak of a different strain of coronavirus which caused Severe Acute Respiratory Syndrome (SARS). SARS killed an estimated 800 people. During that outbreak, a vaccine was developed for testing within 20 months, much longer than the development of potential Covid-19 treatments. 

But Covid-19 also appears to be spreading more quickly than past epidemics. It took five months for the number of cases of SARS to reach more than 5,000 people. This new strain first showed up in patients in December, 2019, and spread to more than 5,000 people in a month, according to CNBC.

Mergers in the biotech and healthcare industry

The biotech industry has experienced a surge in mergers in recent years. New tax laws that have encouraged large pharmaceutical companies to “repatriate” cash overseas has given large companies the funds to buy small startups with promising new treatments, according to reports. Similarly, big pharma companies, many of which have lost patent rights for blockbusters like the statin Lipitor, the erectile dysfunction drug Viagra, and the pain relief medication Lyrica, may be looking to acquire smaller biotech firms with promising new drugs. 

Here are some examples: 

• Bristol-Myers Squibb acquired cancer drug developer Celgene in 2019 for $74 billion. (Celegene acquired Juno Therapeutics for $9 billion in 2018.)
• French company Sanofi said it would purchase U.S. drugmaker Bioverativ for $11.6 billion in 2018.
• F. Hoffmann-La Roche announced plans to acquire a gene therapy company called Spark Therapeutics for $4.8 billion in June, 2019. 

The healthcare industry is massive in the U.S., employing more people than any other. In 2017, the number of people working in health care surpassed the next two largest industries, manufacturing and retail.

In 2018, Americans spent $3.65 trillion on healthcare, more than in any other developed country in the world, according to Fortune.  And that spending is likely to increase 5.5% per year until 2027.

Keep in mind that investing in any industry comes with risk and that the biotech industry has historically been a volatile one.

Investing in the healthcare industry

You can invest in the healthcare and biotech industries on Stash. Stash offers healthcare and biotech ETFs. Stash also offers single stocks in healthcare and biotech companies. 

Remember that diversifying your portfolio of investments is an important part of the Stash Way. And as markets continue to react to the outbreak of Covid-19, investing for the long term is the way to go.

The post The Race to Find a Coronavirus Vaccine appeared first on Stash Learn.

That’s the new world order as the coronavirus called Covid-19, which has been classified as a pandemic by the World Health Organization, continues to spread across the globe, causing lockdowns in Italy and elsewhere. In response to the pandemic, President Trump announced on March 11, 2020, that travel into the United States from every European country would be suspended for 30 days. As global economies continue to struggle, businesses such as airlines, cruise lines, and hotels in the consumer discretionary sector are getting hit the hardest. 

Consumer discretionary spending, also called consumer cyclical spending, refers to spending on non-essential items such as vacations, jewelry, or cars, and it depends on economic cycles. When the economy is in good shape, more people are generally working, wages tend to rise, and more money flows through the economy. As a result, people tend to spend more on discretionary items.

In contrast, when times are tough and the economy slows or is contracting, people will reduce their spending on discretionary items, while they continue spending on the stuff they need, such as groceries, toilet paper, and toothpaste, known as consumer staples.

Global economies respond to the coronavirus

More than 5,600 cases of the virus have been reported and more than 90 people have died in the United States, where markets have tumbled since the end of February. On March 12, 2020, markets experienced their worst day since October 19, 1987. 

The Dow Jones Industrial Average fell 10% and the S&P 500 dropped 9%, entering a bear market on March 11, 2020. A bear market is defined as a period when prices on an index fall 20% or more from a previous high, perhaps after a bull market. The S&P 500 had previously been in a bull market since 2009, in the middle of the recession. 

Industries hurt by the pandemic

Globally, airlines are expected to lose $113 billion in response to the pandemic, with airlines in Asia Pacific expected to lose roughly $58 billion.

More than 6,700 flights are expected to be disrupted by the ban. Delta Air Lines and United Air Lines are expected to be the most affected. American Airlines announced that it would cut 75% of international flights in response to the travel ban while Delta said it would reduce flight capacity by 40%. United will reportedly reduce flights by 50%.

U.S. airlines are also seeking a $50 billion bailout.

As cruise ships have become a breeding ground for the virus, several cruise lines have suspended business.  Princess Cruises, owned by Carnival, announced that 18 of its ships would stop operating for two months. Viking also announced that it would cancel ocean and river cruises until May 1st. 

With people traveling less, the hotel industry has also experienced a dip. Hotel chain Hilton projected a loss in revenue between $25 and $50 million dollars as a result of the virus, according to the Wall Street Journal. Shares of hotel companies including Hilton, Hyatt, and Marriott have fallen during the pandemic. 

The coronavirus has also had an impact on the sports and entertainment industries as many events in which large groups of people are expected to gather have been canceled. The National Collegiate Athletic Association (NCAA ) canceled its annual college basketball tournament March Madness due to the virus, while the National Basketball Association (NBA) canceled the remainder of its basketball season. Golf’s Masters Tournament, which was to take place in April, has also been postponed. 

Movie premieres including those of the new James Bond movie No Time to Die, A Quiet Place Part II, and Mulan have been postponed. Disney also announced that it would close all of its parks amidst the pandemic.

Cities such as Los Angeles, New York, and Seattle have shut down restaurants, bars, movie theaters, and gyms to curb the spread of the virus. New York governor Andrew Cuomo also suspended shows on Broadway in New York City as gatherings of more than 500 people have been temporarily banned. 

Silver lining?

While no one is really doing well during the global downturn, some businesses are finding an opportunity. Grocery delivery company Instacart reported that sales increased 10% at the end of February. Demand for consumer goods such as toilet paper and cleaning products has increased so dramatically that some stores have limited the sale of certain products.

Here’s a look at some other industries:

• As more people work from home, employees may need to use video conferencing technology. People have spent 5.5 million minutes in meetings in March 2020 on Cisco’s video conferencing platform, according to CEO Chuck Robbins.
• Biotech companies are racing to develop and test a vaccine for the virus. One such company, Moderna, has shipped a vaccine to the National Institute of Allergy and Infectious Disease. Testing of the vaccine began on March 16, 2020. The Food and Drug Administration (FDA) also granted emergency approval to pharmaceutical company Roche Holding AG’s test which may allow widespread testing for the coronavirus. 
• While many entertainment companies are dealing with rescheduling production of shows and movies, streaming services such as Netflix are expected to see a boost in customers as more people are staying indoors to avoid the virus. In fact, on March 13, 2020, the 1995 movie Outbreak about a virus was the 9th most popular movie streaming on Netflix in the U.S.

More on the coronavirus 

Since the coronavirus first appeared at the end of 2019 in Wuhan, China, the virus has spread to 163 countries, infecting more than 189,000 people and killing more than 7,500 people globally. 

The coronavirus pandemic has slowed production and hurt businesses in China, where the virus originated, and beyond. In the first two months of 2020, China’s industrial output declined by 13.5% and retail sales decreased by 20.5%, according to Reuters. Companies including Tesla, Apple, Starbucks, and Ikea temporarily halted their operations in China during the worst of the outbreak there. Meanwhile, the entire country of Italy is under lockdown.

In the United States, companies including Facebook, Google, Amazon, and Twitter have urged or required employees to work from home and leaders have asked people to socially isolate themselves.

Investing during the pandemic

In times of volatility, it’s best to maintain the Stash Way by diversifying your portfolio to include a mix of stocks, ETFs, and bonds. And keep in mind that investing small amounts regularly and focusing on the long term are also important parts of the Stash Way.

Remember that you can invest in single stocks and ETFs in consumer goods, retail, biotech, healthcare, and more on Stash.

The post Find Out Why Business (for Some) is Booming During the Coronavirus Pandemic appeared first on Stash Learn.

Driven largely by a major overhaul to tax laws in December, biotech stocks have been posting sizable increases this week, as companies in this industry have pursued high-profile mergers and acquisitions that investors seem to find promising.

What is biotech?

Biotech companies produce medicines, therapeutic treatments, and other medical products through the development of biological and chemical processes.

Companies in the industry include some pretty big names you’ve probably heard of, including Pfizer, Amgen, Gilead, and Merck.

What do tax laws have to do with the market?

The changes to tax law, which include a steep cut to the corporate tax rate and an incentive to move cash from overseas to the U.S., are two big reasons why the sector is heating up, according to some experts.

Here’s why:

• The updated tax law slashes the corporate tax rate by nearly in half, to 21% from a previous rate of 35%, meaning companies–including biotech firms–are likely to have more cash on hand in 2018 to buy other companies.
• U.S. companies hold a staggering $2.8 trillion of profit overseas. The two main industries collecting cash overseas are biotech and technology, including companies such as Apple, Microsoft, and Cisco, according to the New York Times.
• Many biotech companies have set up operations internationally to avoid paying high corporate taxes in the U.S., and now hold billions of dollars overseas. However, the new tax law will allow them to “repatriate” that cash at a very low tax rate. That means they can bring the cash back to the U.S., and pay taxes as low as 8%, according to reports.

So how much money are we talking about?

The following is an estimate of what some of the largest biotech companies have stashed overseas:

• Gilead: $29.3 billion
• Bristol-Meyers Squibb: $8.4 billion
• Celgene: $6.9 billion
• Biogen: $4.3 billion

Source: Bloomberg, June, 2017

With all that extra cash potentially coming back to the U.S., it makes sense that biotech companies might use some of it for mergers and acquisitions.

When a company acquires or merges with another company, it usually puts the combined businesses in a stronger position competitively. Companies buy other companies if they have something they need. That could be products, or services or even important research, which is the case in many pharmaceutical deals.

Fun fact: When people talk about M&A, they’re talking about mergers and acquisitions.

Deals in play

With that in mind, here’s a look at what biotech companies announced this week, subject to regulatory approval:

• Celgene announced it planned to acquired Juno Therapeutics for $9 billion.
• French company Sanofi said it would purchase U.S. drugmaker Bioverativ for $11.6 billion.
• Also this week, BioCryst Pharmaceuticals said it would merge with Idera Pharmaceuticals through an exchange of stock.

The M&A activity over the past few days follows a period of fewer acquisitions in the industry, according to reports. One exception is Gilead, which purchased Kite Pharma for close to $12 billion in September, 2017, in a bid to develop immunotherapy drugs. In October, the Food and Drug Administration gave the green light to Kite’s new cancer-fighting immunotherapy.

So what happened?

Here’s what happened to stocks and stock fund values after the mergers and acquisitions were announced:

Modern Meds (XBI), whose underlying fund is SPDR S&P Biotech ETF, surged 5% by Tuesday.*

Similarly, iShares Nasdaq Biotechnology ETF, also posted an increase of nearly 5%.*

Good to know: When one company announces it will buy another, it usually affects the share price of one or both companies. If investors favor the deal, generally speaking stock prices will move up. If they don’t, stock prices will move down.

For example: Celgene’s stock was up 3% on Tuesday, while Juno’s stock was down .06%.**

*Source: Yahoo Finance, January 23, 2018

**Source: MarketWatch, January 23, 2018

The post Why Is Biotech So Hot Right Now? appeared first on Stash Learn.