The stock market is selling off today, and once again it’s being led down by the momentum stocks.
One red-hot industry that continues to get smoked is biotechnology.
The iShares Biotechnology Index (IBB) is down a whopping 6.1%.
Among the big losers are Alexion Pharmaceuticals (-7.4%), Gilead Sciences (-6.8%), and Vertex Pharmaceuticals (-6.1%).
“I frankly just don’t know why biotech is off so much today,” said Mark Schoenebaum, a biotech and pharmaceuticals analyst for ISI Group.
The IBB index is now down 19% from its February high.
The industry has seen huge numbers of IPOs in the last year, which has some folks wondering if this is just the bursting of a bubble.
Meanwhile, the industry analysts have generally remained bullish on the industry based on the long-term profit potential of drugs in the developmental and regulatory pipeline.
“Large cap biotech is now trading at a 2015 and 2016 PE discount to the S&P500!” exclaimed Credit Suisse’s Ravi Mehrotra and Koon Ching in a recent note to clients.
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