E-motions: Vol. No. 1, Issue No. 8, September 12, 2005

Brought to you by California News Tech (OTC BB: CNTE)

Consumers wise up to slick drug advertising: less sexy pharmaceuticals on the rise

1. Emotions in Focus: Public Suspicious that "Lifestyle Drugs" Might Be the Latest in Snake Oil Sales

     Many investors know group sentiment can make us buy into certain pharmaceuticals, but they may not know that sentiment can even make us sick. Under casual consideration, it may appear that illness has been something relatively static throughout human history. It may seem that humans continue to suffer from the same diseases until either science finds a cure for them, or until our natural environment changes, eliminating the risk factors that precipitate a condition. In reality, however, disease can be something that has a very large socio-cultural element to it. Over time, societies' ideas about what is healthy and normal and what consists of appropriate treatment have changed dramatically. These changes are even more profound than the abandonment of ignorant and potentially dangerous practices such as bloodletting. They go as deep beliefs about what conditions are treatable, or shameful problems to be kept secret. At the most potent level, major anxieties on the public mind have even created illnesses particular to the spirit of the times. It is also critical to remember that at every turn, someone has stood to profit from endorsing these ever-shifting ideas.

     Almost a millennium ago, during the Middle Ages, Western society felt deep concerns about eternal damnation, the end of the world, and epidemics sent as punishment from above, such as the black plague. These anxieties manifested themselves as maladies specific to their age, such as mass religious hallucinations and wide reports of diabolical possessions. There even existed a disorder called tarantism, where those who believed they had been bitten by a poisonous spider would suffer melancholy, madness, and the uncontrollable urge to dance. When one individual, claiming to be afflicted, would begin to dance in the street, crowds of others suffering from past spider bites and related past episodes of tarantism, would come out and join them. In the case of all of these Medieval illnesses, while there may have been alternative scientific explanations that we would use today to explain their symptoms, the mass hysteria they created was very real. Moreover, the treatments people used to cure their symptoms were very much based on beliefs about the cause of their illness. In particular, people at this time looked to the Church for cures. Despite the fact that the Church itself had initially sparked these apocalyptic fears and resulting psychosomatic symptoms, it still grew tremendously in wealth and power during this time period because of its active role in people's salvation from their "illnesses".

     Hundreds of years later, at the end of the 19th century, another major wave of socially influenced illnesses and cures hit. This time, many of the sufferers were upper middle class European and American women, and the societal issues that made them sick included class anxiety, sexual repression and misogyny. Symptoms, which have not been recorded to any significant extent before or since, ranged from glove anesthesia to fainting and "hysteria" stemming from reproductive tract problems. Of course, snake oil salesmen pushing patent medicines encouraged the idea that women had a weak constitution that required "nerve tonics" heavy on harmful and addictive cocaine and opiates. At the same time, early psychoanalysts such as Freud and Alder reinforced beliefs that women had anxieties and envies based on their inferior gender roles, and that this role-dissatisfaction had to be corrected. Correcting the problem required years of expensive talk-therapies, provided by a psychoanalyst, naturally.

     Today we still experience some of the patterns of previous centuries. Now it is large pharmaceutical companies with costly network television advertising budgets pushing expensive prescription drugs, which may or may not always be beneficial to consumers. Part of the reason for these tactics is to get patients to ask for particular drug brands instead of generics when they are at the doctor's office. Another large part of these advertising campaigns, however, is to convince the public that they need a wide range of so-called "lifestyle drugs". Whole classes of medications, including diet pills, erectile dysfunction treatments, anti-depressants and Attention Deficit Disorder drugs all center around certain of our cultural assumptions and expectations. We want to have our cake and eat it too, we suffer from competitive anxieties, and we want results right away. Meanwhile, nutritionists stress that weight loss should be based on diet and exercise. Also, there are many indications that certain erectile problems are either signs of underlying cardiovascular problems, or psychological issues. In the case of both depression and Attention Deficit Disorder, many people do legitimately need these medications. However, these disorders are being diagnosed with unprecedented frequency. People do not like to acknowledge that taking a magic pill may not be the answer. Instead, perhaps something is lacking with ways we are taught to behave under stress, and that some elements of the social environment today may not be healthy.

     Health care is very much a business, and certainly has not shied away from the manipulative marketing strategies used in other commercial sectors. Merck & Co., Inc. (NYSE: MRK) is under scrutiny today for potentially misrepresenting the hazards and appropriate uses of a very popular pain medication. Pfizer, Inc. (NYSE: PFE) made incredible amounts of money on anti-impotence medication that not only may have side effects, but also does not cure intimacy problems. Also, the pills are overwhelmingly used by younger men, not as indicated, but rather for sexual indulgence, or to measure up to an impossible standard of male potency.

     With so many stories like these in the news about high profile "lifestyle drugs", perhaps consumers are finally beginning to wise up to big pharmaceutical company advertising and some of our current mass hysteria is fading. Recently, companies offering more generic drugs, creating treatments for less socially influenced health problems, and staying away from scandal are beating the rest of the pharmaceutical pack.

2. The Big Movers and Why

     Hi Tech Pharmacal Co., Inc. (NASDAQ: HITK) was up 11.72% of its value last Thursday. Hi Tech Pharmacal produces a wide range of drugs, nutritional supplements and treatments that are both over the counter and prescription, brand name and generic. Products that have recently won the company attention include medications and inhalers for asthma and medications, testing supplies and nutritional supplements for diabetes. The company has been successful cashing in on the growing move towards cheaper, lower profile generics, and products available without a prescription. Furthermore, its focus is on conditions far removed from the recent drug advertising scandals surround certain other pharmaceutical companies and their dubious pain medications and "lifestyle drugs". Instead, Hi Tech Pharmacal has avoided lawsuits and scandal. Furthermore, it has a market that consists of the sufferers of chronic conditions, which receive relatively little media attention. Also on Thursday, Barr Pharmaceuticals, Inc. (NYSE: BRL) was up 8.27% of its value. Like Hi Tech Pharmacal, Barr Pharmaceuticals has increased its production of generic drugs, has remained on the winning side of patent law disputes, and specializes on a line of products with consistent demand, in Barr's case, oral contraceptives.

3. How to Use the News

     In the future, when using MediaSentiment™ tools, such as MediaSentiment Trend™ to examine the news surrounding health care stocks, take the time to read some of the individual articles listed under individual companies. If the sentiment surrounding a particular company has become increasingly negative, or positive, it is important to know why. Are the reasons small picture issues, such as profits and FDA drug approval proceedings? Or, are the reasons big picture issues, such as changing attitudes about the appropriate way treat a particular disorders, and questions about the safety of a whole class of medications? If the later is case, it may signal a major shift in the way that pharmaceuticals, or other health care companies, should be structuring their businesses. Think about what issues are making people the most anxious at the time, and what the popular theories are about the symptoms a given company's drug treats. Then look for stocks that fit better into the model of wellness and medication that society currently endorses.

4. Last Week in Media Sentiment

     Last week's correlations between MediaSentiment.com's thumbs up / thumbs down recommendations for Heads Up rated companies and subsequent stock highs and lows show a strong relationship. The correlation between ratings for MediaSentiment.com selected stocks and their highs and lows the next day is 92%, explaining a vast majority of the variation in volume. Therefore, this week, MediaSentiment™ gave an edge up to 92% to smart investors who used Heads Up™ recommendations to trade on intraday volatility! Also, last week's correlations between MediaSentiment.com's thumbs up / thumbs down recommendations for Heads Up rated companies and subsequent day closing price show a strong relationship. The correlation between ratings for MediaSentiment.com selected stocks and their closing prices the next day is 77%, explaining a majority of the variation in closing prices. Therefore, this week, MediaSentiment™ gave an edge up to 77% to smart investors who used Heads Up™ recommendations to trade on stock price!

     All figures reflect all MediaSentiment Heads Up™ recommendations for the week of September 5, 2005 through September 9, 2005, rating companies on the day of their quarterly earnings releases correlated with their stock highs, lows, closing prices and daily volumes for the subsequent day.

5. Links you can use

A Physical for Health Care
Firms Prepare to Profit from New Medicare Drug Program
Erectile Dysfunction is Often a Manifestation of Underlying Cardiovascular Problems
Glib Drug Ads Bitter Medicine for Merck

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