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Biotech / Medical : USS - United States Surgical Corporation
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To: Logain Ablar who wrote ()10/16/1997 6:02:00 PM
From: Logain Ablar   of 30
 
Some Background:

USSC used to be a wall street highflyer reaching an all time high of around $135. This was back in the 90 to 92 time period when it pioneered minimum invasive surgery with great surgical staples to close . They had high margins with great growth. Well about this time a few things happened to take the wind out of USS's sails.

1) The chairman exercised and sold a significant amount of stock.
2) It was "alleged USS stuffed the sales channel to meet management's targets (robbing from future quarter sales.)
3) As you can imagine the above two items led to some messy shareholder lawsuits. (At this time it also came out the USS & Mr. Hirsch had some earlier accounting / SEC problems.)
4) Johnson & Johnson won a patent suit and entered the market.
5) J&J sacraficied profits to capture market share.
6) USS entered the suture market where J&J had a dominant market share.
7) The US tax law changed adversly impacting USS's earnings i.e. restrictions on the Puerto Rico income tax benefits to US companies).
8) The managed care initiative (both the Clinton administrations and the insurers efforts) started with the result of hosipitals negotiation price breaks.
9) USS's sales efforts had previously been to surgeons and with J&J and hospital purchasing managers now in the equation USS's margins and sales dropped.

Tim
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