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Six Analysts and top management from seventeen sector firms examine the Specialty Pharmaceuticals sector in this 95 - page Special Focus - Specialty Pharmaceuticals Issue from The Wall Street Transcript available at (212/952-7433) or www.twst.com

TWST: David, what are some of the milestones that have been reached in the industry over the past six to 12 months?

Mr. Steinberg: On the positive side, there have been some nice launches and prescription trends. For example, Shire (Nasdaq:SHPGY) launched Adderall XR, which did phenomenally well in its first six months. Also, Forest’s Celexa kept taking market share from its competitors in the antidepressant category.

TWST: David, is there a growth strategy that you prefer?

Mr. Steinberg: We prefer companies that have a pipeline and also make selected acquisitions. I think the model that has really broken down recently that people are excited about is growth by acquisition strategy. King is a company that could face that issue going forward. So I think that the companies investors want to look at have some sort of pipeline, whether it is developed internally through drug delivery technology or whether they pursue what Shire and Forest do, which is the in-licensing of early-stage products. But either way, you want to have a pipeline because if you miss a quarter and your stock gets hit — and you rely solely on acquisitions — the music stops when you can’t raise money anymore. So we look for companies with at least a decent pipeline.

TWST: David, how are you approaching the group? What is topping your list today?

Mr. Steinberg: We’re focusing on the best companies in the space that you can now get at reasonable prices. Up until the last three or four months, these equities were significantly more expensive. You can now buy into companies with great track records, diversified revenue bases, good script growth and a pipeline — companies with good visibility and earnings growth — for a discount to their forward growth rate, which we have not seen in years. Some of these companies really don’t have too much FDA risk and they don’t need to grow through acquisition. Those are the other caveats. In that group, on the generic side, I agree with Erick. Teva would be our favorite name. Shire is one — and we also like Forest very much — on the branded side. We think Shire is one of the best managed companies in the group. When your biggest drug is facing a generic entrant, and within six months that’s not an issue any more, that is pretty impressive. Shire faced a generic to Adderall, which is a twice-daily ADHD market share leading product. They’ve launched a once a day version of that, and now they’re probably going to put up better revenue numbers this year than they did last year before they even faced the generic. So Shire is an equity that we like. The only tricky part with Shire is they that spend more money as a percent of sales than any other specialty pharma company, and they have 20 products in the pipeline. But there isn’t a ton of visibility on those projects. So with the core products growing nicely and with Adderall stabilized, we’re betting that something significant will come out of the pipeline in the next three years.

1) Specialty Pharmaceuticals - In an in-depth (11,600) words) Analyst Roundtable, Dr. Steven B. Gerber, CIBC World Markets, Marc Goodman, Morgan Stanley, Maria Legatos-Phillips, Banc of America Securities, Erick Lucera, Independence Investment LLC, David Steinberg, Deutsche Bank Securities, examine the outlook for the sector and share specific stock recommendations.

2) Pharmaceuticals - In an in-depth (2,900 words) Analyst Interview, Rodney C. Singleton, G.W. Henssler & Associates, Ltd., examines the outlook for the sector and share specific stock recommendations.

3) CEO interviews (average 2,500 words). Top management of 17 - sector firms examine the outlook for their firm and the sector.