The chaos following Tuesday's presidential election in the U.S. caused investors to flee equities, beginning the week-long tumble of the major stock indices. Biotech, represented by the BioCentury 100, fared better than the overall NASDAQ, which fell 12 percent on the week. But the biotech index still ended the week down 6 percent after a 1.2 percent dip on Wednesday.

Pharmaceutical stocks staged a better showing in anticipation of a victory for George W. Bush, who favors the continued privatization of medical insurance and health care benefits. The AMEX Pharma index finished the week up 3 percent after rising 2.2 percent on Wednesday.

Matthew Murray, portfolio manager at the Alliance Select Biotechnology Fund, saw the divergence as a flight to quality, as some investors reduced their exposure to biotech because the space traditionally has been more risky and volatile than the pharma names on the Big Board. There also were rumblings of profit taking, as biotech has significantly outperformed pharma this year.

But investors who are looking for "quality" in big pharma may be harboring inflated expectations. The drug majors, which poured at least $80 million and virtually all of their political capital into Republican races, won't necessarily be playing a strong hand in the coming battles over Medicare prescription drugs, and the one-sidedness of pharma's largess won't soon be forgotten by the Democrats.

Rolling dice on Medicare

The big pharmaceutical companies clearly were hoping that a Republican majority would allow them to block any meaningful effort to enact a Medicare prescription drug benefit, and even a razor-thin GOP majority in both houses of Congress may prove the industry right in the short-term. But in the long-run the strategy will be the equivalent to tying a knot in a hose: overwhelming pressure will threaten to blow up the balloon, sending a torrent in unpredictable directions.