Dr. Leslie Gaines-Ross wrote a clever piece in her blog ReputationXchange entitled Subprime Leadership.  Dr. Gaines-Ross is the public relations firm Weber Shadwick’s chief reputation strategist.  Her piece focused on a presentation David Gergen, the presidential consultant, current CNN commentator and Harvard professor, made at the Council of PR firm’s Critical Issues Forum the other day.  If you are interested in CEO leadership or what it might mean to a company’s performance check out the blog or go directly to Gergen’s comments.

Prashant Nair is a Mumbai-based Director and Analyst who covers the Indian pharmaceutical, health care and agrochemical sectors for Citi Investment Research.

TWST: Tell me about Dr.Reddy’s (RDY). What is it that you like about them?

Mr. Nair: Dr.Reddy’s is probably one of the best players in the global generics industry in our view, definitely one of the best players among the Indian generic companies. They have a very strong presence in the U.S. and in the Russia-CIS markets. They have a portfolio of products pending approval – not only plain vanilla generic filings, but also a whole lot of patent challenges and limited competition opportunities. So they have products that can help them gain more traction with the trade going forward. It’s a company that is fully integrated in terms of manufacturing, and therefore enjoys the cost advantage that Indian companies have been known for. But at the same time, they have now come to a stage where they have built a certain amount of leverage on the front end in some of the important markets. We think that going forward, this company will potentially grow much faster than most of its competitors in India.

Read more about Prashant Nair’s India Stock Picks in the current Pharmaceuticals Report.

David Amsellem is a Principal and Senior Research Analyst at Piper Jaffray who covers specialty pharmaceuticals. Prior to joining Piper Jaffray in 2008, Mr. Amsellem spent five years at Friedman Billings Ramsey, where he was a Senior Research Analyst covering small- and mid-cap pharmaceuticals from 2006 to 2008, and a Senior Associate on the biotechnology equity research team from 2003 to 2006. Mr. Amsellem was recognized as the number one-ranked analyst in North America for accuracy of earnings estimates in the pharmaceuticals sector in the 2008 Financial Times/StarMine “Best Brokerage Analyst” survey. He graduated from Cornell University with a bachelor’s degree in industrial relations.

TWST: Where are you focusing your attention in the smaller-cap pharma space these days?

Mr. Amsellem: In terms of the smaller caps – companies under 10 billion or under 5 billion in market cap – typically we focus on specialty pharma companies with significant brand businesses. Our focus is mainly outside of generics for now. We typically like companies that have managed their product life cycles well. In other words, they have the ability, either through development or acquisition, to sustain cash flow growth even after key top-line drivers have seen their patents expire. So companies that have been active on the acquisition front, companies that have been active in terms of deepening their R&D pipeline to where they can really sustain their business models over the long term, those are companies that we tend to be more favorably disposed towards. The reality in the specialty pharma business is that assets have finite lives. In the biotech space, biologics have much greater patent protection, much greater market exclusivity, especially when compared to small molecules. I’m thinking about where biosimilars will be, and it’s going to be much tougher for generic competitors to really make a major dent into biologics the way they have in small molecules. So for specialty pharma, the goal for companies is to continually find ways to reinvent themselves. That is the challenge, and it’s a big challenge, and it’s one of the reasons that the multiples for spec pharma companies typically trade closer to, say, big pharmas than they do to big biotech.

TWST: What do you mean?

Mr. Amsellem: The challenge with specialty pharma is terminal value, right? You have a product that’s generating cash flow, but it goes off patent and in three years, five years, seven years – whatever it is – it’s a finite life, whereas biologics don’t have that kind of issue yet. That is being legislated now though. Now for a spec pharma company, five years down the road – maybe earlier, maybe later – you can see a significant decline in revenue and a significant decline in earnings power. That dramatically impacts terminal value. So on one hand you have businesses that generate very significant cash flows. In terms of value and cash flows, these are stocks that are pretty cheap by and large. But there is the challenge of terminal value. So that’s why you’ve seen this kind of multiple compression. You’ve seen that with Big Pharma as well. In terms of this idea of finite patent life and generic competition on the horizon, that’s probably the single biggest reason for multiple compression in the space. And this is just something you just don’t see – or haven’t seen historically – with biotech.

TWST: What types of deals are you seeing?

Mr. Amsellem: I think there are deals that kind of fall all over the spectrum – ex-U.S. companies looking to gain a commercial footprint in the United States. A recent example of that is the Japanese pharma company Sumitomo, which recently announced that it’s purchasing Sepracor for more than $2.6 billion. And that’s an easy way for a deep-pocketed Japanese company to access a sales force so they can readily establish a commercial infrastructure here. That’s one such example. Certainly, we’re seeing consolidation in Big Pharma. In terms of the mid- and small-cap companies, you are seeing more in-licensing and product acquisitions. Certainly, companies in my space, such as Forest (FRX) and Cephalon (CEPH) continue to be active in acquiring specific products, acquiring small companies to add to their pipeline. So I think that in the case of pharma M&A, activity is varied and it continues to be brisk.

Dan Freed wrote a spot on piece for the thestreet.com on how Bank of America might consider replacing Ken Lewis as CEO.  Freed thinks, and so do I, hiring a CEO from outside the bank and possibly outside the banking industry is good idea.

Bank of America’s board might do well to look outside the banking sector for a CEO to replace Ken Lewis, who will leave the post at the end of the year.

Certainly the strategy has worked for Ford Motor Co. which is in the midst of an impressive turnaround without having to rely on government aid as GM and Chrysler have had to do. The architect, of course, is Alan Mulally, who joined Ford as President and CEO in 2006 after a long career at Boeing Co.

Perhaps the best example of an outsider fixing a troubled company is Lou Gerstner, who had no experience in the tech industry when he took the top job at IBM (IBM Quote) in 1993. Gerstner, a veteran of RJR Nabisco and American Express (AXP Quote) is widely credited with saving the company, which was under threat from the rise of the personal computer.

Bank of America needs to find the right candidate rather than settle for someone willing to take on the challenge.   Despite rumors of continuing difficulty in finding candidates from the outside, the board needs to redouble its efforts and make sure it diligently pursues a variety of potential candidates.  We will just have to wait and see.

Sundi Sundaresh’s reign as Adaptec CEO is looking more and more precarious.  Steel Partners, an activist investor/shareholder, is claiming to have the votes to get him dismissed.  Steel Partners has been working for more than a year to make management changes at the firm.  According to a story by Chris Mellor in the UK’s Register,

AP is now reporting that Steel Partners claims it has amassed enough proxy votes from shareholders to boot Sundaresh off Adaptec’s board. The board says it’s waiting for certification of the votes cast before ceding or claiming anything.

If Steel Partners is certified as having sufficient written consents from shareholders then Sundaresh better pack his CEO bags, as can the anti-Steel Partners board members. Adaptec faces having a new CEO, probably an interim one, and a new board that will quite rapidly announce a new strategy aiming at getting Steel Partners a return on its Adaptec investment.

Stay tuned as the answers start rolling in on Sundaresh’s fate as well as that of the firm.For more:Steel Partners Press Release 

Rik Deitsch, President, CEO and Director of Nutra Pharma (NPHC) talked to The Wall Street Transcript about his company Nutra Pharma.  Click here to read the complete interview.

TWST: Would you please tell us about Nutra Pharma?

Mr. Deitsch: Nutra Pharma (NPHC.OB), for want of a better term, is a biotechnology holding company. We seek out interesting concepts, drugs and devices in the biotechnology field, and we bring it into the Nutra Pharma family. We are especially good at finding diamonds in the rough – companies that are poorly managed and/or undercapitalized, and bring them competent management, qualified business plans and then necessary funding. Utilizing this strategy, we now have two divisions: ReceptoPharm is our drug discovery division and Designer Diagnostics is our medical device division. In ReceptoPharm we have drugs for the treatment of HIV, multiple sclerosis (MS), rheumatoid arthritis, adrenomyeloneuropathy (AMN) and pain. In Designer Diagnostics we have medical devices for the rapid isolation and detection of mycobacteria, which are bacteria that are very hard to culture and grow.