Why a Wave of Mergers Next Year Could Lift Drug and Biotech Stocks

This year has been touch-and-go for healthcare investors, but for biotech specialists, it has been abysmal.

While the S&P 500 Health Care Sector Index is nearly keeping pace with the S&P 500 index, the two main biotech exchange-traded funds have struggled to remain in the black. One of them, the SPDR S&P Biotech (ticker: XBI), which focuses on small- and mid-cap names, is down 22%.

That…