Health stocks shrugged midweek, tracking the broader markets, while headlines touched on inhaled insulin news, deals and pre-earnings bets.

First, Pfizer (PFE - Cramer's Take - Stockpickr) and Nektar (NKTR - Cramer's Take - Stockpickr) said Wednesday that in a review of data they found more diabetes patients taking their inhaled insulin treatment Exubera developed new lung cancer than those who were in a control group. Furthermore, Nektar said it will spend no more money on the program and will cease attempts to find a partner for it.

Nektar shares dropped 25% to $5.39. Shares of fellow inhaled insulin developer, MannKind (MNKD - Cramer's Take - Stockpickr), fell 59.8% to $2.35 as investors speculated about the feasibility of its inhaled insulin product, which is in late-stage development.

Meanwhile, small-cap Generex Biotechnology (GNBT - Cramer's Take - Stockpickr), which has an oral insulin product -- absorbed through the mouth and designed not to enter the lungs -- in late-stage development, saw its shares edge up 12.2% to $1.20 on more than double normal volume.

Nektar tugged at the Amex Biotech index, which fell 2.8% to 745.00. Other stocks pulling it down were Amylin (AMLN - Cramer's Take - Stockpickr), down 4.4%, and OSI Pharmaceuticals (OSIP - Cramer's Take - Stockpickr), which fell 3.6%.

More news on the clinical side came from Dutch biotech Crucell (CRXL - Cramer's Take - Stockpickr), which said Wednesday that in an early-stage 40-patient study in South Africa, its tuberculosis vaccine prompted an immune response and met safety goals. Shares rose 6% to $18.95.

In a midweek deal, St. Jude Medical (STJ - Cramer's Take - Stockpickr) said it would buy EP MedSystems (EPMD - Cramer's Take - Stockpickr) for $92.1 million. Each EP MedSystems shareholder will receive $3 a share in cash or St. Jude stock.

Also, St. Jude's board authorized an additional stock buyback of $50 million, increasing its current repurchase authorization to a total of $300 million, to offset the shares issued in the transaction.

St. Jude shares were down 62 cents, or 1.4%, to $44.11, while EP MedSystems shares soared $1.45, or a whopping 102.8%, to $2.86.

Last, get ready for earnings. Genentech (DNA - Cramer's Take - Stockpickr) kicks it off tomorrow after the market close. Wall Street is looking for Genentech to earn 82 cents a share on $3.1 billion in revenue for the quarter, including an expected $624 million in U.S. sales of the cancer drug Avastin. The consensus is for $329 million in Herceptin sales, $202 million in Lucentis sales and $603 million from Rituxan in the U.S.

In an apparent lack of investor enthusiasm, shares of the biotech giant fell $1.33, or 1.7%, to $77.71.