Stock Commentary - New York week to Nov 10, 2008

NEW YORK: experienced yet another volatile week in the reporting period to November 10, with a 3.3% rise in the Dow Jones Industrial Average on November 4, said to be the strongest election day rally, on the prospects of a clear win for Democrat Barack Obama. However, the next two days saw nearly 10 percentage points wiped off the index, which ended 4.8% lower overall. Drug and biotechnology stocks tracked saw falls out-number rises by two to one. While some Wall Street watchers now are looking at post-election pressure on the pharmaceutical sector after the first of the New Year, others feel that it is less affected by fluctuations in the business cycle than other industries. Though profit margins may come under some pressure from the Democratic Congress and the new President's health care plan, some analysts feel that current prices already reflect that prospect, because both candidates spoke of health care reform. Though Mr Obama's plan focuses on generics, allowing importation of drugs, and authorizing Medicare to negotiate with drugmakers, analysts feel that the industry will gain from the expansion of health care coverage as sales, by unit, increase. Moreover, on election night, Barr Pharmaceuticals' chief executive, Bruce Downey, said he expects the next four years to be a "positive environment" for generics, especially with the expected approval of generic biologics. He agreed that expanded coverage means more sales.

Amylin shares continued to slide on the Food and Drug Administration's rejection of data from studies at two manufacturing plants making once-weekly diabetes drug Byetta (exenatide LAR). More than 300 employees are being laid off to save upward of $100.0 million (see page 3). The stock was off another 22.9% for the week. Mylan shares continued to rise, this week up 7%, as investors showed their appreciation of good news related to third-quarter profits and an increase in its earnings guidance for the full year. King Pharmaceuticals was up 9.8% after it posted a better-than-expected quarterly profit, buoyed by sales of its injectable products (see page 5). Investors also approve of its corporate reorganization and are looking ahead to the approval of painkiller Remoxy (oxycodone).