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To: Larry S. who wrote (44607)	11/6/2002 11:44:31 AM
From: Larry S.	Read Replies (1) \| Respond to of 53068

Republican are good for drugs: Drug Stocks Jump after GOP Victories Wednesday November 6, 11:37 am ET By Ransdell Pierson NEW YORK (Reuters) - The sweeping Republican victory in Congressional elections pushed pharmaceutical stocks higher on Wednesday on expectations the sector will receive friendlier treatment in Washington. Republicans, generally considered more closely aligned to business and the pharmaceuticals industry than Democrats, on Tuesday recaptured control of the U.S. Senate and slightly widened their majority in the House of Representatives. "Even prior to the election results, 2003 was shaping up to be a good year for the pharmaceuticals industry," said SG Cowen Securities analyst Steve Scala, as earnings growth declined for many drug companies this year. "The Republican victories are just icing on the cake." The American Stock Exchange Pharmaceuticals index .DRG> -- which includes heavyweights such as Pfizer Inc., Merck and Co. Inc. and Johnson and Johnson -- rose 2 percent, outpacing a slight uptick for the broader S&P 500 index. Eli Lilly and Co. and Wyeth were the largest gainers among the U.S. drug group, each rose more than 4 percent, on the New York Stock Exchange. Pfizer, Bristol-Myers Squibb Co. and Abbott Laboratories Inc. each rose about 3 percent. The industry has been buffeted by problems in the past two years, including patent expirations on some of the world's top-selling medicines, including Lilly's Prozac and Bristol-Myers' cancer drug Taxol. Moreover, launches of new drugs such as Lilly's osteoporosis treatment Forteo and Schering-Plough Corp.'s allergy drug Clarinex have been delayed due to manufacturing quality-control lapses cited by the U.S. Food and Drug Administration. Making matters worse, drugmakers have seen far fewer new drugs approved by the FDA this year than recent years, as company research laboratories have failed to produce enough new medicines to keep company earnings humming at their accustomed superior growth rates. And the industry has trembled over concerns Congress would approve a Medicare drug benefit plan for the elderly and disabled that would institute price controls on highly profitable prescription drugs. Medicare currently only pays for drugs taken in the hospital or in doctors' offices. Scala said a Republican-dominated Congress is more likely to finally pass a Medicare drug benefit plan, and one which would lack "draconian" price-control elements. "Price controls had been feared, but now there is a greater likelihood prices will be left to the free market," in the event a drug benefit is finally adopted, he said. Goldman Sachs analyst James Kelly on Wednesday raised his rating on the U.S. pharmaceutical sector to "neutral" from "cautious," saying regulatory pressures on the industry are likely to ease somewhat following the Republican sweep. The improved regulatory outlook "comes on the back of worsening economic conditions, some patent wins in the sector, which have also been positive, and the potential for an increasing number of new drug approvals in 2003," Kelly said. Kelly said he was not yet changing his view of any specific pharmaceutical firms, although he was still "shying away from companies with higher probabilities of negative earnings adjustments." Scala, however, said he believed Pfizer -- the world's largest drug firm -- stood to gain the most among U.S. drugmakers from the Republican victories.