"Bob Dole is the tax collector for the welfare state." --Representative Newt Gingrich (R-Ga.), 1984
"Bob Dole is a close personal friend and great leader." --Speaker Gingrich, announcing his primary vote for Dole, 1996EDITED BY LARRY LIGHT, WITH OLUWABUNMI SHABIReturn to top
CONGRESS' LATEST DRUG WAR: PATENTS
IT'S THE $2.5 BILLION DRUG tug-of-war. That is what's at stake in a Senate battle over curtailing the patent protection of some big-selling drugs, such as Glaxo Wellcome's ulcer remedy Zantac and Merck's cholesterol-lowering Mevacor. Largest potential beneficiary: Britain's Glaxo. A Zantac patent, originally due to lapse after 1995, now has until July, 1997. That freezes out the generic drugmakers' knockoff version, which would cost about half Zantac's $83 wholesale price for 60 150-milligram tablets.
Senate defenders of Glaxo argue that taking away the patent windfall would undermine the General Agreements on Tariffs & Trade. When Congress passed GATT in late 1994, it changed the patent term, effectively adding an average of about 12 lucrative months to more than 100 drugs' patents. Leading the pro-Glaxo forces are two North Carolina Republicans, Jesse Helms and Lauch Faircloth (Glaxo's U.S. headquarters are near Raleigh), with the Senate GOP leadership going along.
Advocates for the generics point out that GATT allows selling knockoffs after the original term expires as long as a rival had invested heavily by mid-1995 to make the product. Lone exception: the pharmaceutical industry, due to a conflicting provision in U.S. drug law. Senators David Pryor (D-Ark.) and John Chafee (R-R.I.) say they have got the votes to ax this exception. Yet the Senate leadership won't let the question reach the floor. Meanwhile, House Republican leaders are taking a wait-and-see attitude.EDITED BY LARRY LIGHT, WITH OLUWABUNMI SHABI $by By John CareyReturn to top
WALL STREET'S LAPSE IN LSI LOGIC
WALL STREET'S TEA-LEAF readers are drinking a bitter brew lately when it comes to chipmaker LSI Logic. Most expected the company, which is big in networks and servers, to post strong earnings for 1996's first quarter: The consensus, says Zack's Investment Research, was 49 cents per share. But the company on Feb. 29 announced it expects a blah profit performance (32 cents to 35 cents EPS), about the same as the comparable 1995 period. The stock promptly slid four bucks, to 27 5/8, and hasn't recovered since.
Outwardly, analysts shrug off the surprise, but some of their customers are angry. Says one institutional investor in LSI: "I heard nothing but good things until the floor opened." The company says it was hit by a sudden plunge in orders from personal computer manufacturers.
How did the Wall Street analysts get blindsided? "They're not that heavily into PCs--it's a little more than 10% of LSI's revenue," explains Drew Peck of Cowen & Co., who forecast a 47 cents EPS and upgraded LSI from a "buy" to "strong buy" in January. "But when 10% goes almost to zero, that's material." LSI contends that growth will pick up in the second quarter. Having predicted 43 cents, Bear Stearns's Andrew Neff is now more cautious: He's expecting flat earnings for the rest of the year.EDITED BY LARRY LIGHT, WITH OLUWABUNMI SHABIReturn to top
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