Health stocks get the blahs
An investment trivia question: What do each of this year's 10 worst-performing stocks in Massachusetts have in common?
The answer may not be so trivial. Each of the state's 10 biggest losers so far this year are public companies in medical fields. Most are smaller drug companies, like dead-last Nitromed Inc. of Lexington (down 66 percent) and Momenta Pharmaceuticals Inc. of Cambridge (down 43 percent), a former high-flier that lost altitude.
The Massachusetts medical casualties are a small piece of a bigger stock market picture. Medical and healthcare stocks should be attractive defensive choices today, in a market worried about everything from inflation to a stalled economy. They have a long record of moderate growth that holds up under most economic conditions.
This time, investors are not buying it. Some individual drug, device, and healthcare stocks have performed well. But as a sector, medical and healthcare stocks are a big dud.
Many of those companies have run into business trouble, but that's only part of the story. Problems often crop up suddenly and without warning. Even worse, the lingering impact of trouble that medical and health companies encounter is hard to pencil out.
``This group seems fraught with unanalyzable risks, much more so than in other areas," says Mark Donovan , a portfolio manager at Boston Partners Asset Management.
Donovan points to two specific kinds of problems as the most troublesome to medical and healthcare stocks. One is uncertainty over the amount of money government insurance will reimburse companies for specific kinds of products and care. The other involves medical products that turn out to be defective in some way.
``The preponderance of stories in those two areas has caused massive [price to earnings] multiple contraction that will take time to run its course," he said.
Consider Boston Scientific Corp. of Natick and the troubled implantable defibrillators and pacemakers made by the company it recently acquired, Guidant Corp. Boston Scientific shares are down 33 percent this year, and the stock hit its lowest level in more than three years yesterday.
But still other problems have dragged down some medical and healthcare stocks. The headlines have included government price-fixing investigations and big customers negotiating harder for better deals.
In a few cases, demand for products has actually slowed, based on price or safety concerns. St. Jude Medical Inc. , a smaller competitor to Guidant, has not suffered any serious product problems. But its shares have slumped more than 36 percent this year.
Together, the unpredictable problems have been enough to persuade some investors to stay away from the entire sector.
One bellwether stock, Johnson & Johnson, is exactly the kind of investment that should be popular today. But it's not. Johnson & Johnson runs a giant business diversified among drugs, medical devices, and everyday consumer healthcare products, none of which has been trouble. But J&J's stock has gone nowhere this year. Shares worth $60.10 at the end of last year were available for $60.04 yesterday.
The real problem with the medical stock blahs: They could take a lot of time to run their course. Pressures on prices and products are hard to manage, and they aren't going away.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com. 
