Blue-chip research universities such as UCLA and The University of Pennsylvania (full disclosure: I taught, and was compensated for, a writing class at Penn earlier this autumn) were involved, as were old, established financial firms like Citigroup and Wachovia Securities. The doctors involved weren't pikers either. The Times expose, researched and written by reporters Luke Timmerman and David Heath, found at least 26 cases of insider trading related to drug research between doctors and stock analysts. Worse still, the doctors involved in the alleged gambit charged analysts hundreds of dollars per conversation - beer money on Wall Street - for access to potentially hugely profitable information they had in hand. Such actions create an uneven playing field and reduce investor confidence in the integrity of the financial markets. You can't take insider information relating to any company's financial prospects and pass it along to investors.
I spent five years as a bond trader in New York and one fact of life I learned was that when an analyst got a hot tip, it was only a matter of seconds for that tip to be passed along to favored clients.Īnd that practice is illegal. One firm, Gerson Lehrman Group ( even acts as a matchmaker, lining up analysts to talk to any one of 60,000 doctors ensconced in the firm's database. Doctors can charge up to $500 per hour to discuss the pros and cons of clinical drug trials. Big-time investors often pay up to $1 million for such information. It's a growing market, if not a pretty one.
#Psst hey you.....good morning series#
This month, though, a scandal is brewing in biopharm circles that could blow the top off the industry and make it much more difficult for doctors and biopharm research companies to share critical research information - and possibly put some physicians behind bars who try to put a price tag on the sensitive research information they hear about from biopharm industry companies.Īccording to a thunderbolt special series from The Seattle Times, prosecutors are preparing charges against medical researchers who allegedly sell confidential information from prescription drug studies and release that information to Wall Street analysts. In the January issue, I'll write more about what to expect in 2006, and what lessons the life sciences industry can learn from the events of 2005. If 2004 was any indicator when the Biotech Index climbed 12% in November and December after moderate growth in October, then Christmas could come early for bioscience investors. As 2005 draws to a close with the various biotechnology and pharma stock indexes inching upward (the Morgan Stanley Biotech Index was up 3.44% in October), the prospects for a brighter and more profitable 2006 seem fairly positive.
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