Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (178751)	7/10/2002 1:53:55 PM
From: reaper	Read Replies (1) \| Respond to of 436258

<<how do you feel about big pharma? >> i really don't know what to think. i don't know how to handicap drug pipelines, so other than saying something inane like "well, Merck has always discovered new drugs in the past, so they'll definitely come up with something to replace the $10 billion in Vioxx revenue when it comes of patent in a handful of years" i really have no reasonable basis on which to project future earnings and cash flows. the accounting seems clean, the balance sheets are generally pristine, and they all generate substantial free cash flow, so they aren't going to zero. but some recent business practices are kind of questionable: we've had stuff as benign as channel stuffing to more serious problems like bad manufacturing plants (at Schering and Abbott, just of the top of my head; this indicates that management teams might have been cutting some pretty big corners in order to make EPS), to paying off generic competitors to delay generic drug introduction, to recent allegations that some drug distributors have artificially restricted supply in order to create "shortages" and boost price (now this is probably not big pharma's doing). All this is going to create political backlash as America looks for scape-goats in the 2003-05 recession. Given all this negativity, and the fact that they really are inherently good businesses (as opposed to manufacturing cars, which hasn't been a good business since the 1950s), its probably time to buy some. For me, there are enough pizza parlors and hair salons and janitorial services trading at 7-10x cash generation that for my limited longs I'm not feeling drawn to pharma, yet. Cheers

To: MythMan who wrote (178751)	7/10/2002 1:57:14 PM
From: Horgad	Read Replies (1) \| Respond to of 436258

I am with you. I think medical and age related is going to be the place to be after the market is done tanking. After all, the boomers aren't getting any younger. But at what point do you start buying? 10% dividends and <10 P/E? I don't want to be 5 years too early. I have some worries about the future of socialized medicine and government price controls, but I am betting this won't happen as long as our government is run by the big companies through lobby groups.