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Friday, July 28, 2006

To Your Health

By William Trent, CFA of Stock Market Beat

Summary: Rising costs harpooned the HMOs, but could have been foreseen by looking at the detailed PPI data.
In the latest Value Line Industry Survey on the drug industry they say:

The major pharmaceutical companies that dominate the Drug Industry will report June-quarter results over the next few weeks. Year-over-year comparisons are likely to be generally unexciting, primarily reflecting pressures on the top line from significant patent expirations and the resulting assault from generic competition. The silver lining in the drug sector’s multiyear descent, however, are valuations that have reached extraordinarily low levels, from which the downside risk appears manageably low and the dividend yield temptingly high.

The New York Times says the pharmaceutical industry is beginning to reap a windfall from a surprisingly lucrative niche market: drugs for poor people.

PPI data shows that hospital costs are rising faster:

As are pharmaceutical costs:

But a doctor’s visit is not rising as quickly.

Watch List news:

Israeli generic drug maker Taro Pharmaceutical Industries Ltd. said Friday it received notice it may be delisted from the Nasdaq Global Select Market for failing to file its annual report on time. In July the company said it was completing an audit of financial statements for the year ended Dec. 31, 2005 and expects to finish the audit in August. Taro has requested a hearing before Nasdaq’s listing qualifications panel to review the possible delisting. Its shares will remain listed pending the review.

Home healthcare company Apria Healthcare Group Inc. (AHG) said earnings ballooned from a year-ago period weighed down by a hefty charge, and said its finance chief is stepping down. In the second quarter, Apria’s net income increased to $18.5 million, or 43 cents per share, up from $3 million, or 6 cents per share, a year earlier. Year-ago results were hurt by a charge for a $20 million settlement of a government lawsuit over Medicare billing. Analysts, on average, expected earnings of 40 cents a share, according to a Thomson Financial survey.

Biosite says will pay in settlement of patent litigation

Other news:

Johnson & Johnson (JNJ) earned $2.82 billion, or 95 cents per share. A year go it earned $2.59 billion, or 86 cents per share. Excluding special items, J&J earned 98 cents per share. Analysts, on average, expected 97 cents per share, according to Reuters Estimates. Company sales rose 4.7 percent to $13.4 billion, a bit higher than Wall Street expectations of $13.29 billion.

Pfizer earnings rise on sales growth

ImClone profit up, stock sinks

The author may hold a position in the securities discussed.

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