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Legal Questions Still Dogging Wyeth

The settlement was a bargain on Wall Street. Many analysts feared Merck could have lost $10 billion to $20 billion.

"Arguably, the strategy has paid off for Merck," says Darren McKinney, a spokesman for the American Tort Reform Association. "Tort reformers, generally, would like to see defendants fight all the way to verdict as a means of discouraging abusive and frivolous litigation in the future."

The Premarin family was once Wyeth's biggest seller, peaking at $2.1 billion in 2001. By 2004, sales dropped to $880 million, but they have climbed back to $1.06 billion last year.

Sales skidded after the federal research report was released in 2002 when early results showed increased risks of breast cancer. A follow-up study, published this year, said the risk of breast cancer could remain elevated "even years after stopping therapy."

Wyeth said the follow-up report didn't detract from "the appropriate use" of hormone therapy. Wyeth said researchers "selectively" released information "without providing the full context of the data assessed."

Wall Street analysts rarely mention these drugs in their recent reviews, most likely due to Wyeth's string of court victories, an uncertain legal climate and the fact that the company has many moving parts affecting its future results. Some moving parts are experimental alternatives to the Premarin family.

"Perhaps more than any other major pharma organization, Wyeth's pipeline has been significantly impacted by an increasingly conservative FDA," says a June 23 report by Chris Schott of JPMorgan. Schott, who doesn't own shares, has a neutral rating. His firm has had a recent investment banking relationship.

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