FTC Boosts Generics, Bloodies Brands

On April 29, Biovail Corp. , the Canadian specialty pharmaceutical company, saw its shares plummet over 20%, wiping almost a billion dollars from its market value in just one day. A rare sell recommendation from one of the sector's most highly regarded analysts, Jerry Treppel of Banc of America Securities, caused the dramatic slide. It later transpired that Treppel had a potential conflict of interest; he was accused of holding stock in Andrx Corp. , one of Biovail's strongest competitors, promoting Andrx to investors and trading in its options (albeit through a managed account, with trades instigated by the managing broker). And yet another Wall Street scandal ensued.

But what got lost amidst the scandal-mongering was that Treppel had raised some valid points about Biovail and in the...