Looking to capitalize on the flight to affordability, Wal-Mart Stores, Inc. (NYSE: WMT) is planning to reintroduce its 'Great Value' private label food brand with new packaging and more aggressive marketing.

Wal-Mart is reportedly hiring (haven't heard that word in awhile, have you?) 75 people for its private-label business, and there would seem to be no better time for expanding this investment. Consumers are always willing to pay a premium for nationally-known brands but in this economy, that premium could be extremely low, giving Wal-Mart an opportunity to increase its private label revenue by a lot -- and keep a great chunk of its food sales in-house.

A graph from the May 2008 issue of Harvard Business Review tells a story about the dumbing down of the global economy.

From an article, Rebuilding the R&D Engine in Big Pharma [subscription required] the graph shows the total shareholder returns for various industries in two time periods: from 1985 to 2000 and from 2001 to 2007. Here are three of the leading sectors from 1985 to 2000 (average annual shareholder returns are in parentheses):

• Pharmaceuticals (20.0%)
• Financials (18.8%)
• IT (17.4%)

Between 2001 and 2007, three of the leading sectors were:

• Energy (15.2%)
• Materials (14.3%)
• Financials (7.0%)

MAJOR PAPERS:

• The Wall Street Journal reported that the focus of reports of four deaths and 350 allergic reactions to Baxter International Inc's (NYSE: BAX) generic version of the blood thinner drug Heparin, and the ingredients supplied by a Chinese manufacturer, also includes Wisconsin-based Scientific Protein Laboratories, a co-owner of the Chinese manufacturing plant, and majority owned by American Capital Strategies Ltd (NASDAQ: ACAS), a Maryland buyout firm.
• Citigroup Incorporated (NYSE: C) has suspended investors at its CSO Partners hedge fund from withdrawing their money after they attempted to pull more than 30% of the fund's nearly $500M in assets, the Wall Street Journal reported.
• AT&T Inc (NYSE: T) is seeking more revenue from India as it tries to expand its consumer mobile phone operations outside the U.S, the Financial Times reported.

OTHER PAPERS:

• According to the New York Times, the FDA broke its own rules by approving for sale Baxter International's Heparin without first inspecting a Chinese plant where the drug's key ingredient is made.

Speaking at the Reuters Health Summit today, the U.S. head of Israeli generic drug manufacturer, Teva Pharmaceutical (NASDAQ: TEVA), said he could see its U.S. generic-drug market share balloon to more than 30% in the next five years.

Teva currently is the generic market leader with 20% market share. CEO of Teva North America, George Barrett, said that Teva has about 150 generic drugs awaiting U.S. approval that are versions of brand-name medicines worth a total of about $90 billion in annual sales.

Teva is looking for growth via acquisitions as well as organically. In spite of intense competition, Teva has established a tremendous pipeline of generics. BloggingStocks' Aaron Katsman wrote recently about the progress of Teva's clinical trial for an oral MS drug.

Most world health systems are looking to take cost out of the medical system and generics do just that. Teva has a strong history of drug development, regulatory experience, and marketing/distribution prowess. Through its pipeline and with new acquisitions on the horizon, the future looks good for Teva.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author's fund holds a position in TEVA as of 11/15/2007.

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!

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.

Where are people making money? According to Jim Cramer on tonight's MAD MONEY, it's in the LBO market. He noted that KKR is actually down in Netherlands since coming public. If you're going to make some money, you'll need to get close to an LBO, and tonight Cramer recommended a private label food company called TreeHouse Foods Inc. (NYSE:THS) as a great play in LBOs. The company is, among other things, the leading supplier of private-label pickles and non-dairy powdered creamer in the U.S.

The soup and baby food units and others are helping it. The company is not just a food company, it's a leveraged buyout play. The owners have done this before with Keebler by flipping it to Kellogg Company (NYSE:K). He thinks THS is worth betting on. The food business is slow and non-growth in general, but this company is an acquisition company and it is growing earnings with select acquisitions.

He has profiled THS before, but the company has grown since. Now it has a high enough share price to go out and make deals -- so he would be a buyer of THS right now even at the 52-week high.

THS has a $18.33 to $30.50 52-week trading range. THS closed up 1.5% at $30.64, a new 52-week high and above the old high noted from Friday; it traded up another 4% to $32.00 after Cramer touted this stock.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers. [Photo Stefan Powell]