Tags: Pfizer | Legal | Victory | Boosts | Stock

Pfizer Legal Victory Boosts Stock

Tuesday, 20 December 2005 12:00 AM

Dow Jones Newswire is reporting that Norway will become the first Western country to make it mandatory for employers to provide pension contributions for employees.

The news service says that Norwegian legislators should pass a measure today.

"Norway's parliament is set to vote on legislation aimed at securing the future pension system during a time of demographic change," says Dow Jones.

"At its core, the bill transfers part of the cost of future pensions from the state system to employers. Parliament approved the legislation in a preliminary vote Thursday and is widely expected to pass the bill into law in a final vote Tuesday."

While many Norwegian companies already provide private pension contributions, the new law would make such funding mandatory for all.

Dow Jones says that Norwegian employers will pay a minimum of 2% of an employee's gross salary into an account at a private asset manager. Employees can then "match" their employer's contributions up to 2%, as well. Over 560,000 employees in Norway will be eligible for mandatory pensions.

As is the case with many Western nations, it's becoming apparent that Norway has bitten off more than it can chew, in terms of pension guarantees.

Shortfalls are now a massive problem in that country, as life expectancy is on the rise while birthrates have taken a downward turn. With fewer people in the workplace to contribute funds (and more recipients outside of it), Norway faces the same demographic problem that has beset the U.S., the UK and many other Western nations.

Having no sort of roadmap to guide itself out of this pension morass, Norway has employed a legislative fiat to force companies to fund employee pension programs whether they like it or not.

According to the Dow Jones report, Norway can look to its European neighbors for guidance.

"Last month, the U.K. government's pension commission identified company contributions as one way out of a looming pension crisis," says the article.

"Some Central and Eastern European countries have mandatory occupational pension plans for parts of the labor force. In Poland, all employees born in 1969 or later must be enrolled. In the Netherlands, pension agreements between unions and employers cover about 95% of the labor force, according to figures from Allianz Global Investors."

Allianz adds that pension-related investment assets will rise by 7.4% in Western Europe over the next 10 years.

Dow Jones says that Norway's large employers already offer occupational pensions.

"But in the private sector, 57% of all employees lack occupational pensions, according to Storebrand. Most of them are young and work in the services and retail sectors in companies with high staff turnover."

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But they endured quite a scare first.

The fund had hit some major bumps as a result of its 10% investment in drug maker Pfizer.

The pharma giant sent shockwaves up and down Wall Street earlier this month when it announced that third-quarter profits had plummeted by 52%. That, in turn, sent company stock down almost 9%, resulting in a 15-year-low.

While declining sales of linchpin drugs like Lipitor and Viagra had a lot to do with Pfizer's financial woes, analysts noted that many investors were jumping ship because the company has a slew of patents set to expire in 2006. So the company would soon have to battle it out with generic drug makers – on their own turf.

Plus, investors were particularly nervous about Lipitor's patent, which was vulnerable after a patent infringement lawsuit filed by Ranbaxy Pharmaceuticals. With $2.9 billion in Lipitor sales, Pfizer had a lot riding on that case.

But now the verdict is in and the news is all good for Pfizer investors – and, by extension, Vanguard Health shareholders.

According to a Dec. 19 article from Bloomberg News, shares of Pfizer Inc. rose 11% after a U.S. court ruling blocked generic competition until 2011 for the cholesterol-lowering drug Lipitor, the world's best-selling prescription medicine.

"U.S. District Judge Joseph J. Farnan Jr. said Dec. 16 that a version of the drug by India's Ranbaxy Laboratories Ltd. would infringe Pfizer's patents, and he also upheld the validity of the two patents," the news service says.

"Farnan issued his ruling after the close of regular trading in the U.S., following a non-jury trial in Wilmington, Delaware, that ended in December 2004.

Lipitor generated almost $11 billion in worldwide sales last year for the New York-based company – about 20% of its total revenue.

"This was a huge win for Pfizer," company CEO Hank McKinnell told Bloomberg.

"It's good for the industry that we see the courts willing to respect patent rights. I hope this becomes a wake-up call for Congress and the administration, recognizing that this is a threat to American investors and American jobs."

Pfizer stock rose Tuesday to $25, up from $22 in Monday trading. So far in 2005, the stock's value had dropped 16%.

Bloomberg says that 18 million people in the U.S. have been prescribed Lipitor since it was introduced in 1997.

However, the major brand-name drug makers aren't out of the woods just yet.

In a new study by drug consultancy Kline & Co., researchers conclude that generic drug firms are going after the patent process to further reduce generic drug approval times.

It's a strategy that relies less on sledgehammers than on hammer and chisel. Essentially generic drug companies want to chip away at the patent process and slowly bring brand-name drug makers to their knees.

"In the past, the generics companies just used to wait for the patents on brand-name drugs to expire, but now they're being a lot more aggressive and proactive," notes Laura Mahecha, who is a healthcare industry manager and participating research director on the study.

"They're bringing legal challenges to try to break patents in order to bring generic versions to market sooner."

Kline & Co. cites generic drug companies like Teva Pharmaceuticals, Sandoz and the above-mentioned Randaxy as firms that are particularly aggressive.

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Dow Jones Newswire is reporting that Norway will become the first Western country to make it mandatory for employers to provide pension contributions for employees. The news service says that Norwegian legislators should pass a measure today. "Norway's parliament is...
Pfizer,Legal,Victory,Boosts,Stock
1127
2005-00-20
Tuesday, 20 December 2005 12:00 AM
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