No Love for Big Pharma Heading Into Second Half

There's never really a quiet time in the pharmaceutical business, but the third quarter usually offers a relative respite.

Most of the major medical conferences have been held or won't occur until the fall. The Food and Drug Administration advisory committee calendar for reviewing experimental drugs looks pretty sparse until late September. And there aren't many formal FDA decision dates slated for Big Pharma products in the next few months.

But all's not necessarily quiet behind the scenes.

The third quarter could produce more insight into how Big Pharma plans to use funds repatriated from foreign subsidiaries, thanks to the one-time tax holiday bill signed by President Bush last year. Some companies, such as Pfizer(PFE Quote), have already said how much they will repatriate at sharply reduced tax rates, but they haven't given a detailed picture of what they might do with the money.

Anticipated court rulings on patent-challenge lawsuits will continue to play havoc with analysts' economic models, especially for Pfizer and its cholesterol drug Lipitor, and for Bristol-Myers Squibb(BMY Quote) and its anticoagulant Plavix. Analysts long ago stopped betting on when judges might rule in these cases.

Those economic models also will remain written in pencil rather than ink, thanks to two other issues: the still-open question about whether Congress will pass legislation allowing the reimportation of drugs from Canada or elsewhere, and the impact of the new Medicare prescription drug plan, which takes effect next year.

And in this third quarter, at least one trial is expected to start -- and maybe as many as four -- with Merck(MRK Quote) defending itself in the first round of cases involving Vioxx, the arthritis drug pulled by the company Sept. 30 because of an increased risk of cardiovascular problems.