The investment management industry's concerns over pharmaceutical stocks have heightened in recent day, due almost exclusively to the $253 million a Brazario County, Texas, jury awarded the widow of the man who died after taking Vioxx, a prescription painkiller.
The stock value of Merck, the Whitehouse Station, N.J.-based pharmaceutical giant that makes Vioxx, is expected to only decrease and a ripple effect might felt across the sector, experts say in an Aug. 22 report from Reuters.
"It is going to impact the broader sector, especially in the near term," said Anne Marieke Ezendam, a portfolio manager at the U.K.-based money manager Threadneedle Investments. "There is lots of litigation ongoing at the moment and it seems like the claims are going up. It would not surprise me if pharma stocks fell back to the lows seen in the beginning of this year as people are reminded again and again just what the risks are."
Andrew Fellows, of the Swiss wealth manager and brokerage house Pictet Bank, believes that this situation may add perimeter to future liability claims, which would make Vioxx a company, rather than an industry, issue.
"I don't get the impression that investors are panicking. There is a feeling that Merck acted a little bit irrationally, in as much they did promote the product very aggressively and may have not been as open with the clinical data as perhaps they could have been," he said.
Drug makers Eli Lilly and Wyeth have also settled significant lawsuits in recent months, while Pfizer could get hit with litigation over Bextra, another painkiller that was recently pulled from the shelves.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.