Mergers and acquisitions as well as new treatments have been the big drivers in biotech, says Loo. And there have been several high-profile approvals by the FDA.
Biotech also got a boost in the second quarter as several companies increased guidance on their top and bottom lines.
Managed care has soared after a slow start this year. The turnaround was sparked by the Centers for Medicare & Medicaid Services' April 1 approval of rate hikes for Medicare Advantage.
Drugmakers have moved sideways since investors began to pull back from dividend-paying stocks sensitive to interest-rate hikes.
Gilead Sciences' (GILD) three-drug pill for HIV still enjoys patent protection. Also, Gilead's new hepatitis C drug, sofosbuvir, should drive earnings for the next five years, says Evan McCulloch, lead manager of $970 million Franklin Biotechnology Discovery.
Also, Gilead has made several acquisitions in hematology. "They're probably not done," he said.