Salix (NASDAQ: SLXP) has announced it will launch a generic version of its Colazal (treatment for ulcerative colitis) with Watson Pharma (NYSE: WPI). Mylan (NYSE: MYL), Apotex, and Roxane have received FDA clearance to market their own generic versions of SLXP's Colazal.

SLXP is recently down $1.01 to $8.00 in pre-open trading. Wachovia says, "Valuation range: $9 to $10."

SLXP January option implied volatility of 104 is above its 26-week average of 72 according to Track Data, suggesting larger risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

The pharmaceutical sector, due to its complexity, is not for the novice investor. Further, not every pharmaceutical company represents a defensive pick. But one that meets the bar, due to its niche, is Teva Pharmaceutical.

Teva Pharmaceutical Industries Ltd. (ADR) (Nasdaq: TEVA), via an assertive product development program and acquisition schedule, has achieved a leadership position in the global generic segment.

Through a U.S. subsidiary Teva makes generic versions of brand-name antibiotics, heart drugs, and heartburn medications, among other drugs. The company boasts a 150-drug portfolio, including generics for blockbusters Prozac and Mevacor.

Teva Pharmaceuticals (NASDAQ: TEVA) raised its guidance for '07 after Teva launched a generic version of Wyeth (NYSE: WYE) Protonix over the weekend, to the apparent surprise of Wyeth management. It's clear that Teva must have started shipping the drug, and that's why it is raising guidance. Goldman Sachs analyst Randall Stanicky reaffirmed a "Buy" rating on Teva, saying the launch was unsurprising and the company has likely already shipped a decent amount of the generic drug to pharmacies.

This is just the latest in a long line of setbacks for big pharma, as generics continue to scoop up market share of drugs that come off patent. Teva, as the world's leading generic company, continues to grow and has a great pipeline for '08, and as a result the stock should continue climbing as well.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has a position in TEVA and is long the stock. Writer has no position in any other stock mentioned as of 12/24/07.

It was only a couple of months ago when drug maker Novartis AG (NYSE: NVS) announced that it would be slashing 1,260 jobs in the U.S., and today we get news of another 2,500 job cuts worldwide by the year 2010.

Novartis has been particularly hard hit lately in the generic drug market from increased regulatory demands and Increased competition. During the July through September quarter, the company showed that profit fell by over 12 percent. The company did, however, benefit nicely from the sale of its Gerber baby foods and Medical Nutrition units to Nestle SA.

Looking ahead, the company is hoping that it will be able to regain momentum though engineering new drugs and streamlining its units.

Friday's news that the Israeli generic drug maker Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA), has received tentative approval from U.S. health regulators to market its generic version of GlaxoSmithKline Plc's (NYSE: GSK) Requip (Ropinirole HCl) tablets is just more proof that for investors, generics are the way to go. The tablets treat idiopathic Parkinson's disease and primary restless leg syndrome. The brand product had annual sales of approximately $455 million in the United States.

The bigger fundamental question has to do with the future of "big pharma"? Certainly companies like Merck and Co. (NYSE: MRK) and GlaxoSmithKline aren't going away anytime soon. The question is over the long run, with drug's continuously coming off patent, where is the growth going to come from? Generic makers like Teva (the world's largest generic firm) keep waiting for drugs to come off-patent, get approval to market a generic version, and immediately take significant market share away from the big pharma company. (Check out Zack Miller's analysis of this and other generic trends.) According to a report published by PriceWaterhouseCooper, by 2020 the pharmaceutical market is anticipated to more than double to US$1.3 trillion, but with weak pipelines, and soaring R&D costs, as well as higher legal costs, the big-pharma industry is at a crossroads.

Until we hear of a real long-term growth plan for big pharma, it seems like the best way to play the surging growth in he pharmaceutical market is to buy the generics.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer owns stock and is long TEVA. He has no position in any other stock mentioned as of 12/2/07.

Savient Pharmaceuticals, Inc. (NASDAQ: SVNT), surged yesterday on analyst comments regarding their promising new treatment for Gout. Savient is a biopharmaceutical company. It engages in the development, manufacture, and marketing of pharmaceutical products that target unmet medical needs.

Savient makes Oxandrin, which treats involuntary weight loss caused by trauma, surgery, or diseases such as HIV. The company reported a 3rd quarter loss due to increased generic competition for the drug. This is just another in a long line of Pharmaceutical companies to lose market share to the generics. Nonetheless, Citi Investment Research analyst Andrew Swanson started coverage of the drug maker with a "Buy/Speculative" rating and $21 price target. Which is 50% higher than yesterday's closing price.

The company's biggest growth prospect is Puricase which treats gout, a painful inflammation of the joints caused by having too much uric acid built up in the blood. Swanson notes that gout is a large and untapped market, as three million patients await their first new therapy in more than 30 years. At $15,000 per year, even making modest market share assumptions, Swanson's peak sales forecast for Puricase is $600 million.

With such a promising drug in the pipeline this looks like an interesting play. Savient's entire market-cap is $767 million, so this could be a huge opportunity for investors. But as the case with all potential blockbuster drug in trial, if the trial fails, look out below! In a note to clients, Swanson estimates the chance of positive data at 80%, but warned that if the trial fails, Savient shares could fall to as little as $3. Yikes.

Clearly this isn't for the faint of heart, but if you can stomach the potential downside, the upside potential will be well worth the risk.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 11/29/07.

Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA), the largest generic drug maker in the world, has begun enrolling patients in the Phase III clinical trial of oral laquinimod for the treatment of relapsing-remitting multiple sclerosis. The plan is to have 1,000 patients in the trial, which will last between 2-3 years.

Teva already produces Copaxone for the treatment of MS, but has twice tried unsuccessfully in the past to produce an oral drug. This time it is teaming up with the Swedish drug company Active Biotech to trial the oral drug.

If successful, along with Copaxone, Teva will be the clear leader in the fight to treat MS. For the sake of all who suffer from MS, let's hope the third time is a charm, and Teva has success with the oral drug.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Author holds a position in TEVA.

TEVA Pharmaceutical (NASDAQ: TEVA), the world's biggest generic drugmaker, reported that third-quarter net income fell to $525 million, or 64 cents a share, from $606 million, or 74 cents, in the year-earlier period. Sales reached $2.37 billion from $2.29 billion. Consensus estimates of 63 cents of profit on sales of $2.41 billion was expected. While TEVA was a bit light on the revenue line, it beat by a penny on EPS, in large part due to stronger than expected margins.

With a very strong pipeline, and expanding margins, TEVA continues to be the leading large pharma play out there. The stock is trading down today for two reasons. Up more than 50% year to date, the stock was priced for a blowout earnings report, which we didn't get. More importantly, CFO Dan Suesskind announced his retirement. In the company for over 30 years, he is the face of the company to investors, and his departure leaves many nervous. Hi replacement, current Checkpoint (NASDAQ: CHKP) CFO, Eyal Desheh, is no slouch. He knows TEVA well, having worked there for six years and as CFO of a NASDAQ 100 high-tech company, he is well-known on the Street.

For those looking for a long-term pharma play, consider buying TEVA on any weakness.

Disclosure: Author holds both TEVA and CHKP as of 10/30/07.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.

Visit AOL Money & Finance for more earnings coverage

It peeves me just a little bit that in spite of some significant moves, there seems to be a lack of positive press for Kroger Co. (NYSE: KR). Oh, they received a good bit of spin out of their move to sign on to a series of directives promoting "best practices" for keeping tobacco out of the hands of minors, but those headlines were garnered in the interest of ivory tower politicos fanning their own egos, not in true recognition of Kroger itself.

What really gets me miffed though, is that the introduction of a $4 generic drug program at 76 of Kroger's pharmacies went virtually unnoticed by all except possibly a few hardcore AP writers who, after all, are responsible to report on just about everything.

So in the interest of "broad coverage," I now give you the link to the story at RetailingToday.com (registration required). I think the quip there provides a good, quick revelation regarding Kroger's generic drug efforts and it also makes a nice comparison between where Kroger is headed in the pharmaceutical business and how Wal-Mart (NYSE: WMT) is faring so far in that regard. We might note at this time that Wal-Mart has initiated a second price tier in its discount drug program.

Of additional interest in the Kroger camp was the recent indication by Jim Cramer that Kroger could be moving as high as $36. I won't disagree with that. Note that KR ended trading on 10-26-07 at $28.68, and was headed downward. Amid an overall positive attitude about the company, I believe that this puppy has room to run!

European pharmaceutical giant GlaxoSmithKline PLC (NYSE: GSK) stated today that its Q3 profit dropped 5.8% on slowing sales of its Avandia product along with stiffer competition from generic versions of many of its popular products. This was to be expected, as it was mentioned in GSK's last quarterly results as a warning on future guidance. But the firm is not sitting still while some of its sales are being taken by generic competitors, that's for sure.

The world's second-largest drugmaker after U.S.-based Pfizer, Inc. (NYSE: PFE) said that it will be rolling out a $3 billion program designed to cut costs amid an expected drop in 2008's profit due to -- you guessed it -- generic competition. The company is expecting the sales decline in its Avandia diabetes drug product to continue into next year as well.

Avandia, once one of GSK's most promising products, saw sales plummet off the deep end in the latest quarter. In the U.S., the drug saw a 48% decline. The drop was partly due to safety concerns around the drug that arose this summer after a negative article in The New England Journal of Medicine affected prescriptions globally. GSK CEO Jean-Pierre Garnier said job losses will be unavoidable, but did not go into specifics. However, GSK did reaffirm its outlook for the current fiscal year, saying that EPS growth of between 8% and 10% would be expected at constant exchange rates.

Pfizer (NYSE: PFE) saw a sharp drop in its third-quarter profit, as the world's largest drugmaker's net income declined 77% for its most recently completed quarter. Two big takeaways here: Pfizer exited the Exubera inhaled-insulin product market (taking a $2.8 billion charge in the process) and the company faced more severe generic product competition as well.

Generic drugs always hamper big pharma firms, and it's not going to get any easier in the next few years. Pfizer even lowered its 2007 net income forecast when it released Q3 results, partly on expanded generic competition. Try this on for size: Pfizer's Q3 profit came in at $761 million, down from $3.36 billion in the year-ago quarter. Sales fell 2% in the quarter to come in at $12 billion.

In what could be considered a lack of due diligence (oddly) or some terrible mis-forecasting, Pfizer's purchase of the worldwide rights to the Exubera product from Europe's Sanofi-Aventis in 2006 was a complete disaster. The $1.4 billion purchase produced Q2 revenue for Pfizer of $4 million. Let's see: even nominal growth rates would have given Pfizer perhaps $20 million in global annual revenue. Yikes -- that's more than a 20-year period for return there. Pfizer called Exubera numbers "disappointing," but I would call them "totally disastrous." Adding to the pain are the exclusivity losses for blockbuster products like Zithromax, Zoloft and Norvasc, but at least Pfizer sees the writing on the wall, what with 10,000 layoffs and everything.

It must not be much fun to compete with Wal-Mart (NYSE: WMT) in the prescription drugs business. The world's largest retailer keeps dropping prices.

Today, Wal-Mart said it would extend its $4 generic drug program to include a number of additional treatments for "problems including glaucoma, attention deficit disorder, fungal infections and acne," according to MarketWatch. For other items like birth control pills, it will charge $9 against a national average of $30.

Wal-Mart says that the program will save consumers $600 million over the next year, with some of the savings being tremendous. While antifungal Lamisil cost an average of $337.26 one month ago, its generic equivalent, terbinafine, sells at Wal-Mart for $4 for a commonly dispensed quantity of up to a 30-day supply, the company said.

The low-cost drugs raise the question of whether Wal-Mart makes money on them at all. It may use the price points to drive traffic to its stores. If so, companies like CVS Caremark (NYSE: CVS) would watch their stock prices take a beating.

The generic prices also raise the issue of unfair competition. If Wal-Mart does offer the drugs at below cost, is it building an antitrust case for other companies?

The new pricing may be good for consumers, but that doesn't mean the government won't look into it.

Douglas A. McIntyre is a partner at 24/7 Wall St.

In a sign that China still does not have a handle on quality control in a number of its industries, authorities have recalled drugs used to treat leukemia. Although it is not clear whether these have been exported, they have caused leg weakness and urine retention in patients within the large Asian country.

The compounds are put into a number of cancer drugs, so any distribution of them to manufacturers around the world could potentially do harm to patients with a number of diseases.

The first compound is methotrexate, which is used to treat a variety of cancers, arthritis, inflammatory bowel disease, psoriasis, ectopic pregnancies, and early pregnancy tissue that becomes malignant. The second drug is cytarabin hydrochloride, which is used for variety of cancers including leukemia, lymphoma, and Hodgkin's.

The two drugs in question where tainted with vincristine sulfate, which is used to treat HIV-related cancers and brain cancers, among other things. It has along list of severe reactions including seizures, loss of reflexes in the legs, and death. The side effects appeared recently in patients in China.

Given the lack of transparency in the highly competitive worldwide generic drug production, distribution, and sales industries, Americans have no assurance that these important medicines are contamination free. The pharma companies in the U.S. will almost certainly be faced with the kind of inspection issues that have hit big toy firms. That can be very expensive and can go a long way to undermine product confidence.

Douglas A.McIntyre is a partner at 24/7 Wall St.

8 Stocks With Rising Dividends
Dividend-paying stocks don't have to be stodgy. Whether you're 25 or 75, you can use dividend trends to flag solid growth companies run by managers who truly care about their shareholders. These include M&T Bank, W.W. Grainger, Harley-Davidson, Johnson Controls, Seaspan, Praxair, Fastenal and Expeditors International.
The Lure of Rising Dividends - Kiplinger.com


How to Live Like a Billionaire
What does it take to live the life of luxury like one of the world's billionaires? First you need a Gulfstream IV private plane, luxury yacht like the Wally 107, private island, sports car, centurion AmEx, palatial estate, domestic help, private chef, your own sports team and more.
How To Live Like A Billionaire - Forbes.com


$2 Billion in Unclaimed Tax Refunds Could Be Yours
Three years ago 1.8 million individuals decided they had better things to do than file their 2003 tax returns, even though they were due refunds. In total, more than $2.2 billion from that tax year is still sitting in the Internal Revenue Service account. If you think you are one of these 1.8 million people you've only got a few more weeks to claim it.
IRS holding billions in old, unclaimed tax refunds State-By-State Breakdown of Unclaimed Refunds


Take the Sting Out of Credit Card 'Gotchas'
Americans use credit cards to pay for everything from groceries to speeding tickets. But they're increasingly besieged by colossal fees and interest-rate increases that seem to hit them without warning or justification. Under scrutiny from the Democrat-led Congress, which held hearings on credit card practices last week banks also are feeling competitive pressure to become more consumer friendly. Some unpopular practices that credit card issuers are abandoning include: double billing and universal default.
How to Keep Your Credit Card Costs Down - USATODAY.com


Generic Doesn't Always Mean Cheap
At a time when policy makers are searching for ways to cut health-care costs, generic drugs are often viewed as one of the most straightforward solutions. But prices can vary wildly, and may not be nearly as cheap as expected.
Why Generic Doesn't Always Mean Cheap - WSJ.com

Teva Pharmaceutical Industries Ltd. (NASDAQ:TEVA), Israel-based world's largest generic drugmaker, reported fourth quarter net income of $460 million, or 56 cents per share, up from $305 million, or 45 cents per share, a year earlier. Excluding charges, Teva earned 53 cents per share, while analysts on average expected EPS of 58 cents and sales of $2.26 billion, according to Reuters Estimates. Sales during the quarter rose 63% to $2.28 billion.

But Teva shares have gained 2.3% on the Tel-Aviv Stock Exchange and are continuing to climb here and are now (noon) up 6% -- why?

Well, it is actually not surprising. Teva said it expects sales in 2007 to exceed $9 billion (up from $8.4 billion in 2006) and earnings per share to be in the range of $2.07 to $2.19. In 2008, CFO Dan Suesskind said "sales will surpass $10 billion and earnings per share will be above $2.50."

Teva has 162 product applications awaiting approval from the U.S. FDA. These have brand sales of over $92 billion. Teva doesn't only have the largest pipeline in the U.S. generic drug industry, but 42 of the applications are potentially first- to-file, meaning these drugs would have 180-day exclusive sales rights if approved. The outgoing President and CEO Israel Makov said the company expects to receive 30-40 approvals in 2007.

At $37.48, Teva is in the mid-range of its 52-week range of $29.22-43.90, but has performed very well in 2007, gaining 21%. Teva pays dividends and has been repurchasing shares.

My colleague Gary E. Sattler wrote earlier today about love-stocks, stocks to buy and hold for a lifetime, or nearly so. Well, for me, Teva is exactly one such stock.