"As soon as I came to the City," David Smith, managing director of
London office, recalled this morning, "I was told you never short
Sage advice. Friday's late-breaking news that
up 1 7/16 to 118 13/16,
up 2 7/16 to 84 3/16,
up 3 1/2 to 103 3/16,
Johnson & Johnson
up 2 to 68 15/16,
up 3 to 70 5/8,
Pharmacia & Upjohn
up 1 7/16 to 40,
up 4 11/16 to 77 1/16, and
up 6 to 156 1/2.
That big list is one of the reasons the market may be justified in this round of merger frenzy, according to Jeffrey Applegate, chief investment strategist at
"You still have a fragmented industry," Applegate said of the drugs. "This industry is unlike, say, the food industry. The players in the food industry, they already have large single- or double-digit market shares." In contrast, a combined SmithKline and Glaxo, which would be the world's largest drug company, would only hold 7.5% of the global market share. There's room for plenty more mergers as the global drug companies vie to be the biggest.
"I think that this drug story will play again and again," said Cantor's Smith. "No one wants to get left behind -- in this business big is beautiful. I suits them with their research and development. It suits them as they bring new drugs to market. All of this guys are going to have to join up with someone. We're going to merge them up, and demerge them in a few years, just to keep the cycle up so my children are employed."
American Home Products
, which SmithKline left sobbing at the altar, was down 2 1/2 to 92 15/16.
* * * * *
Despite all of the recent attempts at damage control, on a day when most stocks are higher, paired-share REITs are again suffering on concern that they will lose their special tax status.
was down 1 5/8 at 52 5/8 ,
was off 15/16 at 32 1/8,
Patriot American Hospitality
was off 5/16 at 25 5/16 and
First Union Real Estate Investments
was down 11/16 to 73,
was down 13/16 to 44 1/8 and the
Philadelphia Stock Exchange Oil-Service Index
was off 0.45 to 96.92.