European healthcare stocks are experiencing their longest decline since March 2010, driven by market concerns over upcoming third-quarter results from Novo Nordisk (NVO, Financial) and updates on experimental drugs from AstraZeneca (AZN) and Roche (RHHBY). The Stoxx 600 Healthcare Index has dropped 6.1% in September, ending a ten-month winning streak. Novo Nordisk, AstraZeneca, and Roche are responsible for roughly 90% of this month's decline in the index.
J.P. Morgan analysts mentioned last week that Novo Nordisk's third-quarter results, expected in November, might reveal lower-than-expected sales for its popular weight loss drug, Wegovy. The stock has fallen 16% in September, potentially marking its largest monthly decline since August 2016.
Barclays analyst Emily Field, in a report to clients, explained that while current conditions are challenging, this is seen as short-term pain with long-term prospects still intact. She anticipated that the third-quarter results would be the "last bit of bad news" before trial results for Novo Nordisk's experimental drug, CagriSema, are revealed in December.
Similarly, AstraZeneca’s stock has been under pressure, declining 12% in September, marking its largest monthly drop since February 2009. The company's experimental drug, developed in collaboration with Daiichi Sankyo, showed mixed results, raising concerns among analysts about regulatory approval.
Roche’s stock has also suffered this month due to concerns over the side effects of its experimental weight loss drug, leading to doubts about the drug's competitiveness.
On a broader scale, investors have been shifting from the defensive healthcare sector to riskier sectors, contributing to the poor performance of European healthcare stocks this month. However, Rob Strachan, an investment analyst at Evenlode, pointed out that the recent stock price decline has made European healthcare valuations more attractive for long-term investors.
