Goldman Sachs

can't buy a pharmaceutical analyst.

Ever since its aggressive analyst Prem Lachman, ranked No. 1 in 1997 by

Institutional Investor

, left in April 1998, the position has languished emptier than

Keanu Reeves'

head.

"They wanted a high-profile person, and they were possibly even willing to pay for it," says a Wall Streeter who has worked on the Goldman health-care team. "But the politics there are intense. Goldman's not a touchy-feely place."

According to two former Goldman employees and two buy-siders, the firm has flung job offers at several rising stars on the research side to no avail.

J.P. Morgan's

(JPM) - Get Report

Carl Seiden dissed the Great Goldman, as did

Merrill Lynch's

(MER)

Steve Tighe. Both got multimillion-dollar offers and turned them down, these people say.

S.G. Cowen's

Steve Scala was contacted but backed away before discussions got serious, these people add. Neither Seiden nor Tighe would comment. Scala didn't return a call. A Goldman spokesman wouldn't comment.

So far, it hasn't hurt Goldman much to go without a U.S. big pharma analyst. The firm participated in January's mammoth

Pharmacia & Upjohn

(PNU)

secondary, in which Sweden sold its stake in the drug company for $1.7 billion. This is just one deal, but it's a big 'un. Still, it's also kind of a European deal, so the firm may have had an easier time getting away without having a U.S. drug analyst. After all, the belief is that the firm is simply stretching its London-based drug analyst Mark Tracey as far as it can, which is the Goldman way anyhow. Stretch now and pay later, as some former Goldman people characterize it. Tracey didn't return a call seeking comment.

But now is not a particularly good time to lack a U.S.-based pharmaceutical analyst. Many industry watchers think that with growth hard to come by in the coming years and patent expirations looming, drug companies will begin to explore mergers.

Glaxo Wellcome

(GLX)

is on the prowl, and

American Home Products

(AHP)

has been said to be looking to hook up ever since it failed to consummate two mergers last year. While some drug analysts help strategize on mergers and acquisitions as the deals are negotiated, it's not a necessary component to the job. But analysts are often called upon to support the strategic moves of their firms' clients after the deals are announced.

The problems at Goldman can be contrasted to the ease with which rival

Morgan Stanley Dean Witter

(MWD)

filled its pharma analyst position. Last year's

II

numero uno, Paul Brooke, left last month to go to a little hedge fund named

Tiger Asset Management

. Before the dean of pharmaceutical strategists vacated, he helped his firm hire Jami Rubin, a young, intelligent

Schroder

analyst with a talent for picking stocks.

Amazingly enough, there are several reasons why the Goldman position is not that attractive. For one, according to another former Goldman employee who worked in the health-care group, the position requires being more amenable to the firm's banking clients than similar posts at the other major banks. Also, the word is that Goldman hasn't been offering as much money as the other firms, attempting to coast on the prestige of the name. But with Goldman going public, that prestige could be diminished somewhat, as the hallowed partnership structure is altered. Of course, Goldman will be able to give stock, but other firms can counter that.

There also may be a power struggle within the Goldman health-care team as well. The speculation is that Maykin Ho, a four-time winner of the

II

popularity contest for biotechnology and a Goldman managing director, wants to be No. 1 on the health-care team. She has been resistant to the firm's bestowing of an MD title on a new hire, say two former Goldman employees. But one person within Goldman says, "That's nonsense. That sounds like sniping." In keeping with her firm's mumness, Ho didn't return a call seeking comment.