EpiPen Getting Dose of Competition; Gaping Gender Gap; Wells Fargo So Very Sorry Indeed

Shot to the heart…

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EpiPen, which currently controls 95% of the auto-injector epinephrine market, now has to scoot its greedy butt over to make way for a much-needed competitor. Privately-held Kaleo Pharma is bringing back Auvi-Q, the auto-injector device that was taken off the market back in 2015 because of dosage delivery problems. Apparently the problems have been fixed and you can expect to see Auvi-Q back on the shelves in the first half of 2017. However, before you breathe a sigh of relief, experts have said that the price for Auvi-Q might not be all that competitive. In fact, between 2013 – 2015, Kaleo’s price hikes matched Mylan’s and the cost for the auto-injector might go for $500, just $100 less than EpiPen’s highly-criticized $600 2-pack. Make no mistake. Kaleo’s no more an angel in the pharmaceutical industry than Mylan is. The company is also known for making Evzio injectors which use naloxone to treat opioid-overdoses. Once upon a very short time ago – like a few years – the devices cost $690. But not anymore, as the devices go for $4,500 per two-pack. Kaleo has promised that its Auvi-Q device will be affordable and expects insurance companies to help see that promise through. In the meantime, as Mylan’s generic version of its EpiPen is expected to go for $300, the FDA nixed Teva Pharmaceuticals application for a generic version of the EpiPen citing “major deficiencies.” Yikes.

Rock on, Rwanda!

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Just when you thought the gender pay gap couldn’t get any worse, along comes the World Economic Forum to tell us otherwise in its Global Gender Gap Report. The study examined 144 countries and took into account all kinds of factors like economic opportunities, political empowerment and education. The study disconcertingly found that if we wait 170 years, that pesky gender gap might actually close. But who wants to stick around until the year 2186? Sadly, last year’s projection had us holding our collective breath until 2133 but in all fairness, if we actually start to do things correctly, the gender gap could “could be reduced to parity within the next 10 years.” That’s got to be somewhat reassuring, right? One of the more unpleasant nuggets in the report illustrated that average female salaries were half those of men and disturbingly enough, education gains didn’t necessarily help women increase their salaries. Iceland, Finland, Norway, Sweden and Rwanda took the top five spots in that order. (Yes, Rwanda).  I’m thinking maybe it’s time to start poaching our political leaders from those countries. Just a thought. The United Kingdom ranked twentieth, even with a female Prime Minister. Go figure. And even though the U.S. ranked twenty-eighth last year, this year the Land of the Free fell to spot number 45, apparently due to a decline of women in the labor force. At least the U.S.’s ranking wasn’t as bad as Yemen, which ranked dead last. Saudi Arabia, Syria and Pakistan also claimed the loser spots which I suppose makes sense considering those countries tend to treat women as property instead of human beings.

 

It still hurts…

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After just 13 days into his tenure, Wells Fargo already has its latest CEO, Tim Sloan, apologizing. Of course, that apology is over the account scandal that already cost the bank $185 million in fines from the Consumer Financial Protection Bureau. But what’s different about this apology is that Sloan was actually addressing the bank’s 260,000 employees. Which is a step up from last month when former Wells Fargo CEO John Stumpf took to blaming 5,300 lower-level employees instead. However, karma is not done with the bank just yet as Wells Fargo could end up eating $8 billion in lost business in the next 12-18 months since approximately 14% of its current customers are looking to switch to more trust-worthy competitors.  As Sloan noted in his apology,“many felt we blamed our team members. That one still hurts, and I am committed to rectifying it.” And so the bank is hiring culture experts to fix the weaknesses that led to this ugly episode. Of course, cultural weaknesses aside, the bank can look forward to both criminal investigations and class-actions suits. Which is only fair considering that the wrongfully blamed lower-level employees – many whom made less than $15 per hour – were met with retaliation after they dared to call in to the bank’s internal ethics hotline.

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Mylan CEO Using New Math; End for Land’s End CEO; Mousy Talk on Twitter

Miss-stated…

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Let’s give it up for Mylan CEO Heather Bresch for providing us with some fiscal humor today. In case you missed it, she told Congress last week that poor little Mylan only makes $50 on each EpiPen 2 pack for which it charges $600. But the darndest thing happened. It seems that, for some strange reason, when Mylan calculated its sales and profit figures to present to Congress, the pharmaceutical company applied a statutory U.S. tax rate of 37.5%. Which is so weird because Mylan re-domiciled in the Netherlands in order to pay less taxes. In fact, last year Mylan paid a rate of 7.4%. And that’s even weirder because at that rate, Mylan’s profits come in closer to $160 per pack. The company sells over 4 million packs a year. If that’s not a $240 million arithmetic discrepancy, then I don’t know what is. Several members of Congress had strong opinions on Ms. Bresch’s capacity for honesty and presumably, math.  Representative Buddy Carter (R-GA), who as luck would have it is also a pharmacist in real life, called Mylan’s creative pricing a “shell game.” Shares of Mylan dropped a smudge.  Oh well.

Vattene!

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After less than two years on the job, Lands’ End CEO Federica Marchionni is out effective immediately. The now-ex CEO, who held posts at Dolce and Gabbana and Ferrari, just couldn’t seem to bring a luxurious vibe to a very middle America brand. Go figure. To be fair, the Wisconsin-based company is giving her credit for helping Lands’ End sow the seeds towards becoming a global lifestyle brand.  Which is incredibly heart-warming.  She probably didn’t help her cause when she interviewed Gloria Steinem for the company’s Spring catalog. At first she ticked off the anti-abortionists just for featuring the iconic yet controversial figure. After all, the company does sell a lot of uniforms to Catholic schools.  I’m pretty sure there’s a joke in there, but I’m not inclined to look for it. Then she managed to tick off the pro-choicers when she apologized to the anti-abortion activists for writing about Steinem in the first place. You can’t win, I tell you.  In the end, however, it did all come down to money, and Ms. Marchionni didn’t really make any for the company. Lands’ End sales were down 7% last year while shares were down 33% for the year. To add insult to fiscal injury, shares are down again today 11%, perhaps because the company now finds itself looking for its third CEO in just over two years.

Tweet tweet, squeak squeak…

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Could Twitter be going to the rodents? That might not be such a bad thing if word on the street – Wall Street, that is – is true.  Rumor has it that Disney is making a play for the social media company along with Google and Salesforce. Shares have been going up on the news since Friday and those shares need all the help they can get as Twitter continues its struggle to increase revenue. But the House of Mouse rumblings seem to have the most traction with talk that the company is currently working on a potential bid for Twitter. Interestingly enough, Twitter CEO Jack Dorsey sits on the Disney board so an acquisition isn’t so far-fetched. And since Disney’s biggest biz, cable television, has been losing ground to online streaming services, Disney Chief Bob Iger has been investing heavily in tech, thereby making a Twitter acquisition a very logical move. Twitter itself is looking to evolve into a bona fide media company, already offering live streaming NFL Thursday Night Football and the Presidential debates that air tonight. That focus will fit in nicely at Disney. Twitter’s hoping an acquisition deal will put the company’s value at a meaty $30 billion.  And who doesn’t like the sound of $30 billion?

Banks Behaving Badly; More Karma Headed Towards EpiPen Maker; Shamu Entertainer Ditches Dividend

D’oh!

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There are few things life more stupid than pissing off Senator Elizabeth Warren (D-MA). Yet Wells Fargo CEO John Stumpf managed to do just that with his prepared, yet sometimes absurd remarks that were carefully crafted for his much deserved beating by the Senate.  That beating came after the bank had to cough up a $185 million fine because employees opened up more than two million unauthorized checking accounts and credit cards. Senator Warren said, among many other colorful things, that Stumpf demonstrated “gutless leadership” and called for him to be personally criminally investigated by both the Department of Justice and the SEC. Yowza. Stumpf did attempt to explain that Price Waterhouse Coopers was brought in to review the accounts in 2015. The problem is that Senator Sherrod Brown (D-OH)  wondered very loudly why Wells Fargo didn’t do that immediately after a scathing L.A. Times article came out exposing the scandal way back in 2013.  In the meantime, Carrie Tolstedt, who headed the retail banking business that oversaw the fraudulent accounts, retired in July with $125 million from a previous stock compensation. Of course, the bank’s top executives attempted to point the finger at lower level employees who made between $35,000 – $60,000 a year. Wells Fargo fired 5,300 employees in the last few years for improper conduct tied to the fraudulent accounts. Senator Bob Menendez (D-NJ) made sure to ask Mr. Stumpf how much he took home last year: $19.3 billion was the answer. John Stumpf is still very much gainfully employed and is apparently “deeply sorry.”

Give a shot…

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West Virginia joins the list of states gunning for Mylan ever since the company hiked the price of their life-saving EpiPen drug to $600 for a 2-pack. Mylan argues that it recoups less than half of that $600 Epipen price tag yet the drug accounts for 40% of the company’s operating profits. The state’s attorney general, Patrick Morrisey is going after the drug-maker, filing a petition to find out information that might just lead to some very unpleasant Medicaid fraud charges for Mylan. The subpoena could determine whether Mylan underpaid on rebates so that it could participate in the state’s Medicaid program. And while Mylan has yet to comment, its CEO Heather Bresch has a very unpleasant date planned for Wednesday with the House Committee on Oversight and Government Reform. You might have heard that her father is Senator Joe Manchin (D-W.VA) Awkward. Also problematic, in terms of West Virginia’s Antitrust Act, is how Mylan sued Teva Pharmaceuticals for patent infringement when the latter wanted to make a considerably cheaper, generic version. The two companies settled but in the meantime, blame it on the FDA for not yet approving the generic version. This latest investigation, by the way, is completely separate from New Attorney General Eric Schneiderman’s investigation.

Nothing to sea here folks….

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More rough waters for SeaWorld Entertainment (SEAS) as the theme park company hit a new low today of $11.77. While it did rebound a bit, the company still plans to issue its last dividend – 10 cents a share – on October 7, which is down from the 21 cents it had previously issued. But after that, the dividend will be put on hold…indefinitely. Instead, SeaWorld will use that money to buy back shares as the company stares at a future without killer whales in captivity.  Starting next year, SeaWorld in San Diego will bid a salty farewell to its Orca shows, with San Antonio and Orlando following suit in 2019. The brutal publicity from the 2013 Orca documentary, Blackfish, has put a significant damper on earnings and attendance at the theme parks, with visitors down 8% to about 6 million for the year. Interestingly, SeaWorld thinks the drop in attendance has more to do with other factors like Tropical Storm Colin and a shift in holidays. Whatever the real reason is, the fact remains that revenue was down 5% to $371 million from last year’s $392 million for the same period.  Add to that a drop in profit of $5.8 million from $17.8 for the same quarter last year and you’ve got yourself a hot fiscal mess.

 

 

What Goes Around Comes Around for EpiPen Maker Mylan; Fox News Says Sorry With $20 million; About LEGO’s Brick Shortage

Karma anyone?

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There’s nothing like a ridiculous over the top price hike to get the US attorney general’s unwanted scrutiny. Attorney General Eric Schneiderman is now taking a cold hard look at Mylan in the form of a very unflattering antitrust investigation. The AG would like to know if Mylan violated antitrust laws when it gave schools free devices while contractually barring them from purchasing products from other competitors for a whole year. Mylan unwittingly invited this unwelcome attention when it drastically increased the price of its life-saving devices from $100 in 2009 to $600 today. You reap what you sow, I suppose. Mylan’s EpiPen4Schools program has so far given 700,000 pens to 65,000 schools, and according to Mylan, it followed all the rules and had no purchase requirements for the devices. But according to the investigation, it seems that Mylan may have cheated schools by handily placing certain terms into the sales contracts which seem awfully anti-competitive. Well, at least the company is offering a generic version for $300. Isn’t that special?

Speaking of karma…

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Former Fox News broadcaster, Gretchen Carlson, is getting $20 million from Fox News to settle the sexual harassment lawsuit she filed back in August against former Fox News CEO Roger Ailes. If you recall, Carlson filed suit because she said that her contract wasn’t renewed after she refused to sleep with Ailes. Ailes, of course, denied the allegations and said the lawsuit was just retaliation for when the network didn’t renew her contract. Strangely enough – or not – once she filed her lawsuit, many many other women at Fox News also started coming forward with even more sexual harassment claims, some of which have since been settled. Apparently, Roger Ailes had complaints against him going back to the 80s. Ailes has several supporters at Fox including Brit Hume, Sean Hannity, Bill O’Reilly, Maria Bartiromo and Greta Van Susteren who, by the way, just announced that she’s now leaving the network. Some said her departure has to do with a financial disagreement, while others strongly believe it has to do with Ailes demise at the network he founded back in 1996. Fox, however, did publicly apologize to Gretchen Carlson and praised her work and career. And while Fox has been a veritable ratings juggernaut, this last incident spooked investors by exposing a weakness. Shares of 21st Century Fox, which owns Fox News took a dive, albeit a slight 1%. And if for some inexplicable reason you feel bad for Roger Ailes, don’t. He walked away with a $40 million severance package.

If you build it, they will buy…

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Lego, maker of everybody’s favorite plastic toy bricks, posted some positively unimpressive numbers that included flat sales in the U.S. All because there was simply not enough of the plastic bricks to go around. That’s right. After posting a record profit last year, the world’s largest toymaker – sorry, Mattel – didn’t have the resources to get out its shipments according to the demand. Net profit for the company slipped to about 3.49 billion Danish kroner from last years’ 3.55 billion Danish kroner. 3.49 billion kroner, by the way is equivalent to about $523 million. But revenue was still up 11% to 15.7 billion kroner which translates to $2.35 billion. So the company went ahead and took money that would have gone towards profits to make some investments to increase and improve its supply chain. That included adding 3,500 jobs, bringing the total amount of Lego employees to 18,500, and building up factories in Mexico and China, amongst other locations. At least Lego doesn’t have to answer to demanding shareholders seeing as how it’s a family-controlled company.