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Biotech / Medical : Watson Pharmaceuticals -- Ignore unavailable to you. Want to Upgrade?

To: FNS who wrote (77)	7/21/1998 12:54:00 PM
From: Doughboy	Read Replies (1) \| Respond to of 83

WPI has gotten pummelled the last few days by the news that it and other generic drug makers have been sent letters of inquiry by the FTC over their pricing practices. The NY Times discussed the focus being on Mylan because it may have cornered the market on certain generic drugs by locking up raw material supplies through long term contracts and recently began raising prices on its drugs. Does anyone know whether WPI employs similar practices? I think this is much ado about nothing. Raising prices is almost never an antitrust problem because it must be proven that either the company is engaging in price fixing or that the company has "market or pricing power" and is employing it to anticompetitive ends. How can one have market power over a generic drug? By definition, a generic drug has a strong competitor in the branded drug. And as Mylan responded, there is no reason why it should have to take a loss on its drugs. If the market won't support the generic drug, then they can close up shop on them, and then there really will be no competition. I think the FTC is sending the letters of inquiry as a shot across the bow to the generics in the hope that it will squelch future price increases. Any other opinions or info?