Two factors seem to be inhibiting the drug sector lately. One is the poor pipeline for the major pharm's. The other is that Congress has noticed that drug manufacturers have a higher profit margin and pay less taxes proportionately, compare to other businesses. Congress is suppose to discuss this situation in January.
Being an Irish company, Elan does very well with their tax benefits.
Hopefully, Congress will do nothing stupid like price controls. The winning drugs help pay for the losers that do not make it to market, which are in the big majority. Getting a drug thru the FDA is no easy task, and it's expensive.
The drug sector will probably rally when Congress makes it up its mind. It seems like a good long term play.