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The coronavirus pandemic is throwing a spotlight on stocks in the U.S. health-care sector, home to the companies that could develop treatments, vaccines and improved diagnostics needed to tackle the greatest public-health crisis in a century.

Health care has held up better than most S&P 500 sectors. Since the S&P 500 hit a record high on Feb. 19, health-care stocks are down about 18 per cent as of Wednesday, while the benchmark index has tumbled 27 per cent.

The sector is typically considered a defensive area of the market because some investors believe consumers will continue buying health-care products even during uncertain times.

Shares of pharmaceutical and biotechnology companies have led the pack, including those working on potential treatments and other ways to address the rapidly spreading COVID-19 pandemic.

In particular, shares of Regeneron Pharmaceuticals Inc. and Gilead Sciences Inc. have risen 24 per cent and 8 per cent, respectively, since the S&P hit its peak.

“A lot of these companies are working on a solution to the problem,” said Walter Todd, chief investment officer with Greenwood Capital in South Carolina. “We can debate what it means to them … monetarily, but perception-wise they are viewed as a safe haven because of that.”

Greenwood Capital in recent weeks bought shares of Regeneron and Roche Holding AG, a Swiss company that has diagnostics and a potential therapy for the new coronavirus.

The purchases added to the firm’s overweight position in the health-care sector, although it has pared its holdings during the recent outperformance, Mr. Todd said.

Health care lagged the market’s big gains in 2019. Institutional investors generally held a lower weighting in the sector relative to benchmark indexes before the pandemic took hold this year, said Rebecca Chesworth, senior equities strategist at State Street Global Advisors.

Health care “has been one of the most popular places to put money in the past couple of weeks,” she added.

The sector recently traded at 12.9 times forward 12-month earnings estimates, compared with 14 times for the overall S&P 500, according to Refinitiv Datastream.

Pharmaceutical and biotech stocks, including Eli Lilly and Co. and Vertex Pharmaceuticals Inc., make up eight of the sector’s 10 best performers since Feb. 19, all of which have gained or fallen far less than the broader market.

“In general, if you are on a drug, you are staying on that drug,” said Teresa McRoberts, a portfolio manager who focuses on health care at Fred Alger Management. “So that part of their business is pretty safe.”

Some areas of the sector have been hit hard by the vast ripple effects of the virus, particularly medical-device companies dependent on elective procedures that are being delayed to preserve hospital capacity and resources for coronavirus patients. Shares of Zimmer Biomet Holdings and Stryker Corp., which are in the knee- and hip-replacement fields, are down 44 per cent and 36 per cent, respectively, since Feb 19.

Shares of hospital chain HCA Healthcare Inc. have slumped 44 per cent over that period as hospitals lose high-margin elective procedures and cope with severe disruption from the influx of coronavirus patients, said Jeff Jonas, health-care portfolio manager with Gabelli Funds.

Mr. Jonas, however, says those areas could be quicker to recover than other parts of the economy when the pandemic recedes.

“You’re going to be more nervous about getting on a plane, staying in a hotel, going out to dinner in the aftermath of this than you are about going back to see your doctor or to get a procedure done,” he said.

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