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By Alex Morozov, CFA | 08-17-2009 02:40 PM

Will Reform Put a Target on Pharma's Back?

Morningstar's Damien Conover says that current reform proposals are more like a slingshot than a rifle aimed at pharmaceutical companies--which are currently priced for a worst-case scenario.

Alex Morozov: Hi, I'm Alex Morozov, the associate director of the health-care team here at Morningstar. With some sort of health-care reform imminent in the near future, the pharmaceutical sector is viewed by many to have a target on its back. With me is our senior pharmaceutical analyst, Damien Conover, to discuss potential reform proposals and the impact it will have on the pharmaceutical stocks.

Welcome, Damien.

Damien Conover: Thanks for having me, Alex.

Morozov: While the pharmaceutical sector is a favorite target for everybody, it seems that the current proposals being floated out there kind of lack punch a little bit. Can you talk about that?

Conover: Yeah, I agree with you. Like you said, pharmaceutical firms are definitely a big target. But it looks like what's going to happen to the pharmaceutical firms is it's like they may get hit more with a slingshot rather than a big rifle. It looks like it's going to be manageable.

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