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Bristol meyers Original Source Link: (May no longer be active)    http://biz.yahoo.com/opt/020711/0eafd6893b09be5fe7fe847c6cc9bd41_1.html http://biz.yahoo.com/opt/020711/0eafd6893b09be5fe7fe847c6cc9bd41_1.html Thursday July 11, 5:30 pm Eastern Time INDEX INTELLIGENCE: DRG-Pharmaceutical Stocks Fall Apart, Frederic Ruffy, Optionetics.com Pharmaceutical stocks weighed down the market on Thursday. The AMEX Pharmaceutical Index (^DRG) tumbled to a new four-year low on news that Bristol-Meyers (BMY) was the subject of a Securities and Exchange Commission Investigation into the way the drug-maker reported sales. The news comes just three days after another drug giant-Merck & Co. (MRK) disclosed that it misreported billions of dollars in revenues. The latest events add to a long list of problems that have surfaced throughout the drug sector so far this year. Moreover, unfortunately, the outlook is not much brighter going forward. Bristol-Meyers was the latest constituent of corporate America to drop a bomb on Wall Street. The drug-maker said that the Securities and Exchange Commission [SEC] was investigating the way the company reported sales. Specifically, the SEC is concerned that discounted sales to wholesales last year might have misled investors regarding the company's true revenue growth. In April, the drug-maker lower profit forecasts after it said that last year's revenues were inflated by sales incentives-which left wholesalers with enormous inventories. The news of the SEC investigation surfaced on Thursday, which sent shares tumbling 5% to $22.00 a share. Earlier this week, Merck added to investor angst after the company said it recorded $12.4 billion in revenue from its pharmacy-benefits unit over the past three years that the it never actually received. According to a filing with the Securities o unit included co-payments collected by pharmacies in its revenues, even though Medco did not receive those funds. The amount of the revenues was no small matter. In fact, between 1999 and 2001, the co-payments equaled almost 10% of Merck's reported revenue. While the drug-maker first disclosed the accounting irregularity in an April SEC filing, it wasn't until a subsequent SEC filing last Friday that the size of the matter was revealed. The problems in the pharmaceutical sector go beyond the recent troubles facing Merck and Bristol-Meyers. In early-March, a series of stock-specific news events sank the sector. For example, shares of Bristol Meyers tumbled to five-year lows after one of its congestive heart failure drugs, Vanlev, failed to show better results than its generic counterpart. A few trading sessions later, shares of Merck & Co. fell after the drug-maker said it voluntarily withdrew its application for approval of a painkiller, which was considered critical to the firm's financial future. Ivax Corp. (IVX), Schering Plough (SGP), Watson Pharmaceuticals (WPI) also gave investors reasons to worry this spring and, as a result, from March 15 to April 4, the AMEX Pharmaceutical fell nearly 8%. In May, shares of Schering Plough and Abbott Labs (ABT) tumbled on reports that the Food and Drug Administration [FDA] was taking stricter measures against the two pharmaceutical companies. Specifically, the FDA launched a criminal probe into some of Schering Plough's product lines and tol n Chicago, IL was not up to manufacturing standards. The actions had a significant financial impact on both companies and shares tumbled on the news in May. Also during that time, Pfizer (PFE) disclosed that its receivables in the fourth quarter rose despite a decline in sales. Receivables represent money owed by customers. The fact that they rose while sales declined had some investors worried that Pfizer was selling more goods than what is actually in demand. This so-called “channel stuffing” fueled the growing concern about accounting practices within the drug sector. While accounting concerns are weighing on the pharmaceutical sector today, the outlook for pharmaceutical stocks is not particularly rosy going forward. At least, that appears to be the conclusion of Wall Street Journal journalist Michael Waldholz (“Outlook Is Grim for Drug Makers as Pricing Pressures Take Hold,” July 10, 2002). According to the news editor, “The current climate for drug makers is the worst I've seen in 25 years of reporting on the health-care beat.” Put simply, the main reason for the deterioration in the industry is due to lackluster profit growth, which owes to increased competition and pricing pressure throughout the industry. Unfortunately, there appear to be few immediate solutions to those problems in sight. Frederic Ruffy Senior Writer & Index Strategist Optionetics.com ~ Your Options Education Site Visit Fred Ruffy's Forum For more information on learning how to make money with options, go to the Optionetics.com full site! We empower investors through knowledge.

Adelphia founder and son convicted of fraud { July 9 2004 } Adelphia jailed AIG used hedge funds to report gains Bank one mutual fund fraud probe { November 27 2003 } Banks deleted email Bristol meyers Bush angered speech { June 28 2002 } Bush cheney hens { July 9 2002 } Bush stock sell { July 21 2002 } Bush violated laws Cheney Citigroup morgan Citigroup skirt rules Congress grills banks Corporate reforms reassessed { July 23 2004 } Ernst young auditing firm barred auditing six months { April 17 2004 } Everybody outraged { July 2 2002 } Gore bashes bush Harken energy bush { July 12 2002 } Insurance accounting fraud by buffett subsidiary Insurance AIG cooks books and apologizes { February 10 2006 } Lieberman soft on corporate crooks { July 29 2002 } Lynch enron scam { August 8 2002 } Martha stewart convicted Martha stewart seeks retrial after government perjury Mccain proposal { July 12 2002 } New york chinatown bank rush { April 22 2003 } Newscorp worldcom No corporate reform { June 10 2002 } On wall street a rise in dismissals over ethics { March 29 2005 } Post saves bush { July 12 2002 } Qwest admits Scandal closes mutual fund security trust { November 26 2003 } Scandal markets { June 26 2002 } Schwab mutual funds improper trading { November 14 2003 } Sec charges dallas firm with fraud { December 5 2003 } Sec probes disney { December 4 2002 } Sec probing ibm { June 2 2003 } Sec told to get tough mutual fund fraud Secret service stewart witness charged with perjury Time warner may pay 750m fine Tyco execs charged { September 13 2002 } Xerox admits fraud Files Listed: 43

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