The pharma sector has been in the middle of a controversy, with questions being raised about the high prices of drugs. Democratic presidential frontrunner Hillary Clinton’s “price gouging” tweet triggered a slide in healthcare stocks in September. While there have always been concerns regarding the pricing and affordability of prescription drugs, the issue is back in focus following a 5000% price hike implemented by Turing Pharmaceuticals for Daraprim (pyrimethamine) that was approved by the FDA way back in 1953. (Read: 16 Bold ETF Predictions for 2016 ) Other companies like Valeant (NYSE: VRX ) are also under review for significantly hiking the prices of acquired drugs. Irrespective of who wins the presidential race, drug pricing will remain a topic of discussion among policymakers, the media and the general public. Meanwhile, mergers, acquisitions and deals continue to take center stage in the pharma sector. While 2014 turned out to be one of the most active years in the pharma sector where mergers and acquisitions (M&As) and licensing agreements are concerned, the trend continued this year as well. Small bolt-on acquisitions, in-licensing activities and collaborations for the development of pipeline candidates will also continue especially in therapeutic areas like central nervous system disorders, diabetes and immunology/inflammation. The hepatitis C virus market is also attracting a lot of attention. (Read: Top Sectors of 2016 and Their Leading ETFs ) Another lucrative area is immuno-oncology as these therapies have the potential to change the treatment paradigm for cancer — they basically use the natural capability of the patient’s own immune system to fight the cancer. Major players in this field include Bristol-Myers (NYSE: BMY ), AstraZeneca (NYSE: AZN ), Merck (NYSE: MRK ) and Roche. Deals targeting immuno-oncology are being inked by companies like Pfizer (NYSE: PFE ), Merck KGaA ( OTCPK:MKGAY ), Bristol-Myers, AstraZeneca and Incyte (NASDAQ: INCY ). Another trend being witnessed is the divestment of non-core business segments. Companies like Pfizer, UCB ( OTCPK:UCBJY ), Novartis (NYSE: NVS ), Glaxo (NYSE: GSK ) and AstraZeneca have all been a part of this trend. The monetization of non-core assets allows these companies to focus on their areas of expertise. Restructuring activities are also gaining momentum as large pharma companies are looking to cut costs and streamline their operations. Most of these companies are re-evaluating their pipelines and discontinuing programs which do not have a favorable risk-benefit profile. Swapping of businesses is another activity that could pick pace in 2016. Biosimilars are also a focus area. Pfizer’s acquisition of Hospira gives it a strong position in the biosimilars market. Companies like Merck and Novartis are involved in the development of biosimilars as well – in fact, Novartis’ Sandoz was the first company to launch a biosimilar in the U.S. New products are steadily gaining traction and contributing significantly to sales and so far in 2015, the FDA has approved 43 new molecular entities (NMEs) and biological products. Some of the important new product approvals this year include Vertex’s cystic fibrosis treatment, Orkambi, Pfizer’s cancer treatment, Ibrance, Novartis’ psoriasis treatment, Cosentyx, PCSK9 inhibitors – Amgen’s (NASDAQ: AMGN ) Repatha and Sanofi (NYSE: SNY )/Regeneron’s (NASDAQ: REGN ) Praluent, Roche’s advanced melanoma treatment, Cotellic and Gilead’s (NASDAQ: GILD ) Genvoya (HIV). Pharma ETFs in Focus Highlighted below are some pharma ETFs – ETFs present a low-cost and convenient way to get a diversified exposure to the sector. PowerShares Dynamic Pharmaceuticals Portfolio ETF (NYSEARCA: PJP ) PJP, launched in Jun 2005 by Invesco PowerShares, tracks the Dynamic Pharmaceuticals Intellidex Index. The fund covers health care stocks. The top 3 holdings include Bristol-Myers Squibb (5.22%), Eli Lilly & Co. (NYSE: LLY ) (5.16%) and Johnson & Johnson (NYSE: JNJ ) (5.13%). The total assets of the fund as of Dec 15, 2015 were $1,691.5 million representing 23 holdings. The fund’s expense ratio is 0.56% while dividend yield is 0.47%. The trading volume is roughly 135,985 shares per day. SPDR S&P Pharmaceuticals ETF (NYSEARCA: XPH ) XPH, launched in Jun 2006, tracks the S&P Pharmaceuticals Select Industry Index. This ETF primarily covers pharma stocks (99.39%) with the top 3 holdings being Intra-Cellular Therapies, Inc. ( OTCQB:ITCI ) (4.84%), Nektar Therapeutics (NASDAQ: NKTR ) (3.69%), and Bristol-Myers Squibb (3.44%). Total assets as of Dec 15, 2015 were $695.6 million representing 41 holdings. The fund’s expense ratio is 0.35% and dividend yield is 0.71%. The trading volume is roughly 65,529 shares per day. iShares U.S. Pharmaceuticals ETF (NYSEARCA: IHE ) IHE, launched in May 2006, seeks investment results that correspond generally to the price and yield performance of the Dow Jones U.S. Select Pharmaceuticals Index. The fund mainly consists of pharma companies (87%). Biotech companies account for about 10.6% of the fund. The top 3 holdings of this fund are Johnson & Johnson (10.79%), Pfizer (8.70%) and Bristol-Myers Squibb (7.84%). The total assets of the fund as of Dec 16, 2015 were $890.45 million representing 43 holdings. The fund’s expense ratio is 0.45% with the dividend yield being 0.89%. The trading volume is roughly 28,951 shares per day. Market Vectors Pharmaceutical ETF (NYSEARCA: PPH ) PPH was launched in Dec 2011 and tracks the Market Vectors U.S. Listed Pharmaceutical 25 Index. The top 3 holdings of this fund are large-cap pharma companies – Johnson & Johnson (7.97%), Novartis (7.02%) and Bristol-Myers Squibb (5.55%). The total assets as of Dec 16, 2015 were $335.9 million representing 26 holdings. While the expense ratio is 0.35%, dividend yield is 2.04%. The trading volume is roughly 72,694 shares per day. Conclusion While EU austerity measures, negative currency impact and pricing pressure remain headwinds, the pharma industry is out of the worst of its genericization phase. Many companies, which had faced generic headwinds in the last couple of years, should continue to see a sustained improvement in results this year. Cost-cutting, downsizing, emerging markets and new products should support growth. Increased pipeline visibility and appropriate utilization of cash should increase confidence in the sector. Link to the original article on Zacks.com