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Strategies & Market Trends : Value Investing

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To: Jurgis Bekepuris who wrote (14246)	4/4/2002 2:46:47 PM
From: Bob Rudd	Read Replies (2) of 78715

Jurgis: I don't dwell on ROE per se, but a key driver behind ROE is margins and they are under pressure. The gomment got a dawg in this fight since there's little political will to fix medicare so they got to cut costs. This leads to reduced patent extensions. Going generic whacks profits by upwards of 90%. The aging portfolio's of the big pharma's have been helped by these extensions, but that's coming to an end. Unfortunately the discovery-based drug developement process at the big pharma's is mature...the low hanging fruit has been picked and the FDA's focused on safety so replacements are slow in coming. thestreet.com I can't hang an ROE number on it, but it looks like margins and multiples are coming down.

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