Big Pharma To Profit From Health Care Reform

By Bernhard Warner and Matthew Yeomans

October 19, 2009 / The Big Money.com

It may be a bit too early, but the Wall Street Journal this morning wastes no time in lining up the winners and losers of health care reform. The list is hardly a surprise. "The drug industry stands to gain in a health-care overhaul by getting tens of millions of newly insured customers, while insurance companie—especially those that cater to the individual market—look like they are in for a tougher time," the newspaper writes. The $829 billion plan being worked over by Congress would extend health coverage to 29 million Americans—a boon, in effect, for drug makers, pharmacists, and hospitals. And insurance companies? They "would get more customers, too, but not necessarily the ones they want," the WSJ concludes.

Speaking of winners and losers, money managers at even some of the largest mutual funds will be left out of the bonus windfall due to hit Wall Street this year, the WSJ reports. Citing figures from recruiting firm Russell Reynolds Associates, the newspaper writes that "bonus pools at fund-management firms are likely to shrink by as much as 35% as the $10 trillion industry copes with reduced assets and a stock market that has been hard on business."

There's renewed talk this morning that French media giant Vivendi will finally offload its remaining stake in NBC Universal as it once again looks to reinvent itself, the New York Times reports from Paris. The expected bidder is cable giant Comcast (CMCSA), an acquisition that "would clear the way for the formation of the next big American media giant," the newspaper writes. The dominoes set in motion from such would also mean General Electric (GE), which holds an 80 percent stake in NBC Universal, eventually exits the entertainment business. But there's a small matter of money that stands in the way of this new world order in the biz. The WSJ, citing sources, says GE and Vivendi "are about $500 million apart in talks over what Vivendi should be paid for its minority stake." All parties on this side of the Atlantic appear to agree in principle on an NBC Universal-Comcast tie-up. GE and Vivendi, too, appear ready to sort out a deal that would eventually get them out of the business. It all comes down to last minute haggling over the value of Vivendi's stake. "One person familiar with the price discussions said Vivendi's asking price is higher than anticipated, but 'hardly a deal killer,' " the WSJ writes.

Google (GOOG) has fired another shot across Microsoft's (MSFT) bow with the launch of a rare major advertising campaign, writes the Guardian. The European part of a global promotional push, titled Gone Google, is for its online office software that includes Google mail, Google Docs, a calendar, and digital-security services. Google says these cloud-based services now are used by some 2 million businesses, notes Reuters. While Google's business apps are just a tiny part of the company's overall business, they offer a chance to drive a strategic dagger through the armor of Office, Microsoft's business-enterprise software.

Chevron (CVX) has announced a new natural gas find to bolster its ambitious Gorgon project off the Australian coast, the BBC reports. Along with drilling partners Shell and Exxon Mobil, Chevron expects Gorgon to come online in 2014 just as Asia's demand for natural gas skyrockets. But while the supermajors have no problem collaborating on new fossil fuel finds, trying to get them and other energy companies to agree on climate change is a whole other problem. As the NYT reports, the forthcoming Senate climate change bill is pitching oil companies against pure-play natural gas providers who, in turn, are squabbling with coal producers even as utility providers argue over the merits of coal providers versus renewable energy upstarts. Despite having already spent $200 million this year in lobbying against the bill, such are the fissures in an energy industry normally be united against climate change legislation that, "some supporters of global warming legislation believe that the division[s] ... could improve the prospects for the legislation."

And, finally, you'd think keeping CEOs out of harm's way would be a lucrative enough business these days. Alas, maybe not. According to the Financial Times, corporate security specialist Kroll is planning to enter the credit-ratings business. Founder Jules Kroll is already making his pitch. "What I am telling institutional investors is you basically have to take charge. This is your money. When people come to sell you products and offer you ratings from the oligopoly, you say to them you want a Kroll.”