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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: What has happened to the pharmaceutical stocks over the past year and what is the outlook going forward?

Mr. Singleton: The sector has been beaten pretty far down, right along with the rest of the S&P over the last 12 months, as well as for the year to date. As a matter of fact, the S&P Pharmaceuticals Index is down about 21% year to date. Oftentimes, we look at that as a buying opportunity because there are some quality stocks in this sector. As the economy picks up, and considering the demographics that surround the sector, we would expect some positive outcomes over the next 12 to maybe 24 months.

TWST: How are the valuations of the major pharmaceutical companies? And how do these valuations compare to those of other companies in other healthcare sectors?

Mr. Singleton: The valuations have come down pretty far. As far as other healthcare firms are concerned, you might find that pharmaceuticals are still going to carry a bit of a premium, but that’s to be expected. It’s my feeling that as those valuations come down, although they might still be at a premium relative to other healthcare names, they’re still worth the money.

TWST: What are the issues to watch with regard to pricing and reimbursement in the US and overseas?

Mr. Singleton: We have to pay close attention to Medicare reimbursement for a lot of these drugs, especially newer ones that are coming out. We’ll also have to pay attention to how other insurance companies and HMOs are treating certain drugs. For instance, let’s talk about Claritin from Schering-Plough, and then their next-generation product Clarinex. The company plowed money into R&D to make this “next-generation” product, but the difference between it and the preceding product is so slight that the insurers have no real need or desire to reimburse for this new drug if it’s not going to be much different from the older one, which won’t cost as much.

TWST: Let’s move on to pharmaceutical companies that you are investing in. What, in particular, are you finding attractive for investment at this time?

Mr. Singleton: Our portfolio is made up of about 8.75% pharma, including generics. We find Mylan Labs (NYSE:MYL), a generic drug company, awfully attractive. Their stable of medicines is very diverse; they have drugs in about 38 therapeutic categories. Frankly, demographics are really on Mylan’s side. Just last year, about 47% of all prescriptions were filled using generic pills. That’s up from 44% in 2000. In 1986, the number was less than 25%. So you’re seeing good growth in their segment. Plain and simple: America is getting older. People 65 and over are about 12% of the US population. By 2030, they will be about 20%, which equates to about 70 million people over 65 in this country. It’s common knowledge that older people are the chief consumers of drugs, so growth in that segment of the population is favorable to Mylan. A company like Mylan, which gets drugs when they come off patent, makes a product that’s just as good as what might be in a bottle that Schering-Plough produced but is selling it at a much cheaper price. That’s a great stock to buy and it’s a great stock, in our opinion, to hold on to for the long term

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.