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Pfizer, Teva Accused in Suit of Keeping Generic Drug Off Market

Dec. 2 (Bloomberg) — Pfizer Inc.’s Wyeth unit and Teva Pharmaceuticals USA Inc. were accused by a group of prescription drug retailers of illegally keeping a generic version of the Effexor XR antidepressant off the market.

“Wyeth engaged in an overarching anticompetitive scheme to prevent and delay the approval and marketing of generic versions of Effexor XR,” the retailers, including Walgreen Co. and Kroger Co., said in a complaint filed Nov. 30 in federal court in Trenton, New Jersey.

The retailers allege that Wyeth fraudulently obtained patents and engaged in “sham litigation” to delay generic versions of the extended release drug. They also alleged that Wyeth and the U.S. unit of Israel-based Teva Pharmaceuticals Industries Ltd. colluded to keep Teva’s generic version off the market until June 2010.

Joan Campion, a spokeswoman for New York-based Pfizer, and Denise Bradley, a spokeswoman for Teva North America, didn’t immediately return calls seeking comment on the lawsuit after regular business hours yesterday.

The case is Walgreen v. Wyeth, 11-6985, U.S. District Court, District of New Jersey (Trenton).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net .

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net .

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Apple Executive in Charge of Government Sales Is Said to Depart

Dec. 1 (Bloomberg) — Apple Inc.’s vice president in charge of sales to the U.S. government, who helped get its devices into more federal agencies, has left the company, according to a person with knowledge of the move.

Ron Police, who had run the government sales force since 2004, left in October, said the person, who asked not to be named because the departure hasn’t been disclosed. Police’s LinkedIn profile indicates that he’s no longer at the company.

Police, who couldn’t be reached for comment, helped Apple’s iPhone and iPad gain a foothold at government agencies, a market traditionally dominated by technology products from companies such as Microsoft Corp., Dell Inc. and Research In Motion Ltd. To further that effort, Apple is seeking security certification from the National Institute of Standards, the agency that provides technology recommendations to the federal government.

While President Barack Obama has said he uses an iPad, government sales still only account for a small part of Apple’s revenue. In the fiscal year ended in September 2010, the latest period with complete data available, the federal government spent $50.8 million on Apple products, either directly or through resellers and integrators, according to information compiled by Bloomberg Government. Apple’s total sales in that period were $65.2 billion.

Even so, government agencies are starting to use Apple’s products more. The U.S. Defense Department has purchased iPads for trial use, and the U.S. Veterans Affairs Department has said its employees will be able to use iPhones and iPads to conduct official work.

Kristin Huguet, a spokeswoman for Cupertino, California- based Apple, declined to comment.

Police’s departure creates another senior job opening for Chief Executive Officer Tim Cook to fill. Apple also is seeking executives for its retail operations and the iAd mobile- advertising platform.

Apple shares rose 1.5 percent to $387.93 at the close in New York. The stock has climbed 20 percent this year.

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Heineken Buys U.K. Pub Estate From RBS for $646 Million

Dec. 2 (Bloomberg) — Heineken NV, the world’s third- biggest brewer by volume, acquired 918 U.K. pubs it manages for Royal Bank of Scotland Group Plc in a 412 million-pound ($646 million) deal that creates one of Britain’s biggest pub owners.

The purchase of the Galaxy Pub Estate will give Heineken ownership of 1,380 pubs when added to the 462 outlets already controlled by the Dutch brewer, the Amsterdam-based company said today in a statement. Heineken’s Scottish & Newcastle unit has managed the Galaxy pubs on behalf of RBS since 1999.

The acquisition is a “significant vote of confidence” in the U.K. pub industry, Stefan Orlowski, Heineken’s U.K. managing director, said in the statement. U.K. pub profits have been hit by a slump in consumer spending, a smoking ban and discounted beer in supermarkets. Outlets are closing at the rate of 25 per week, the British Beer & Pub Association said in March.

Heineken, which is struggling with declining beer sales in western Europe, said it will take over the largely freehold pub business on a “cash-and-debt-free basis.” In addition to the purchase price, 10 million pounds has been paid to settle accrued amounts owed under a management agreement between RBS and Heineken, the brewer said, adding that the acquisition will result in a one-time pretax expense of 28 million pounds.

Acquisition Funding

“The valuation is difficult to assess as a result of too many loose ends, but the immediate one-off costs suggest that this has not been a bargain,” Richard Withagen, an analyst at SNS Securities in Amsterdam, said in an e-mailed note. “Strategically, the acquisition absolutely makes sense.”

Heineken will fund the purchase with existing cash and credit facilities, according to John-Paul Schuirink, a spokesman for the brewer. The company said May 5 it obtained a 2 billion- euro five-year credit line to refinance and back acquisitions.

RBS, Britain’s biggest government-owned lender has been selling assets including bank branches and its credit-card payment processing unit. The Edinburgh-based bank also has to sell its insurance operations, which includes Direct Line and Churchill, by 2013 to comply with a European Union ruling following its receipt of state aid.

The sale of the Galaxy estate is “in line with the asset reduction element of RBS’ non-core strategic plan,” the bank said in a statement today. “The proceeds received will reduce further the overall funded assets in non-core.” RBS had reduced its non-core businesses to 105 billion pounds as of Sept. 30, since it created the non-core division in 2009.

‘Leading Position’

Galaxy had earnings before interest, tax, depreciation and amortization of 45 million pounds in the year ended Dec. 31 and a gross asset value of 406 million pounds. The purchase will be “earnings accretive” from December, Heineken said.

“Our ownership of this estate strengthens our leading position in the U.K. beer and cider market, particularly in the valuable on-trade channel,” Didier Debrosse, Heineken’s regional president for western Europe, said in the statement.

Heineken rose 1.6 percent to 35.32 euros as of 10 a.m. in Amsterdam trading. RBS gained 4.2 percent to 21.42 pence.

RBS Corporate Finance and Sapient Corporate Finance advised the bank on the transaction.

To contact the reporter on this story: Sarah Shannon in London at shannon4@bloomberg.net .

To contact the editor responsible for this story: Paul Jarvis at pjarvis@bloomberg.net

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Dec. 3 (Bloomberg) — China can’t use its $3.2 trillion in foreign exchange reserves to “rescue” European nations and the country “has done its part” to help the region deal with its financial crisis, Vice Foreign Minister Fu Ying said.

“Foreign reserves are not revenues,” Fu, whose portfolio is European affairs, said in a question and answer session following a speech in Beijing yesterday. “It’s not money that can be used by the premier or the finance minister.”

Fu said China can’t use its reserves to fund poverty alleviation at home or to bail out foreign countries. The country learned from the 1997 Asian Financial Crisis that it needs to keep large reserves to maintain liquidity in order to honor obligations, she said.

Europe is struggling to contain a sovereign debt crisis that has forced Portugal, Ireland and Greece to seek bailouts. After leaders in October agreed to increase the region’s rescue fund, French President Nicolas Sarkozy said he planned to call Chinese President Hu Jintao to discuss how the Asian country can contribute.

China’s foreign exchange reserves, the world’s largest, stood at $3.2 trillion at the end of September. The country invests in U.S. Treasuries, sovereign debt sold by European Union countries and other international bonds. A portion is also invested in equities and other financial instruments by China Investment Corp., the country’s sovereign wealth fund.

U.S. Investment

China wants to convert some of those reserves into investments in the U.S., Chinese Commerce Minister Chen Deming said separately in a speech to the American Chamber of Commerce in Beijing yesterday evening.

China is “willing to convert some of the holdings of debt into investment in the U.S.,” Chen said, without giving details. He also said that the government is also very concerned that a further “festering” of the debt crisis in Europe will affect the nation’s economy.

The nation’s sovereign wealth fund, China Investment Corp., may give “indirect” support to Europe through investments without being the nation’s main route to any aid, fund Executive Vice President Jesse Wang said Nov. 24.

The fund “wouldn’t be the main channel” if China helps tackle the sovereign-debt crisis, Wang said in an interview at a forum in Beijing yesterday. “However, if during such a process there are good investment opportunities in Europe and if CIC’s investment helped the destination company or country to recover and developed the economy, that would be indirect support.”

Central Bank’s Call

The Foreign Ministry does not control the country’s foreign exchange reserves, and the ministry’s Fu said yesterday it would have been more appropriate for People’s Bank of China Governor Zhou Xiaochuan to make the remarks, which were in response to a question. Fu is one of six vice foreign ministers, according the the ministry’s website.

Fu also said “now is not the time” for China to have a contingency plan in the event a euro zone country defaults on its debts or exits from the 17-nation single currency. The government has already done its part to help Europe, which has the “wisdom” and strong economic fundamentals to solve its sovereign debt crisis, she said.

“The argument that China should rescue Europe does not stand,” Fu said.

To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editor responsible for this story: John Brinsley at jbrinsley@bloomberg.net

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China Rejects U.S. Panel Ruling That Solar Imports Harm Industry

Dec. 4 (Bloomberg) — China said a preliminary ruling by a U.S. trade panel that imports of Chinese solar panels are harming the domestic industry shows the country’s “inclination to trade protectionism.”

The U.S. International Trade Commission on Dec. 2 took the first step toward imposing added tariffs on Chinese solar imports, voting unanimously in Washington on a petition by Bonn- based SolarWorld AG that called for antidumping and countervailing duties. The commission will now hold a full investigation.

“The ruling was made without sufficient evidence showing U.S. solar panel industry has been harmed,” China’s Ministry of Commerce said in a statement on its website yesterday. The decision was taken “regardless of defense opinions from Chinese firms, as well as opposition from the U.S. domestic industries and other stakeholders, which prominently shows the U.S.’s strong inclination to trade protectionism and for which China is deeply concerned.”

The Chinese government uses cash grants, raw-materials discounts, preferential loans, tax incentives and currency manipulation to boost exports of solar cells, according to SolarWorld’s Oct. 19 complaint to the ITC and the U.S. Commerce Department. SolarWorld, a maker of solar modules, is seeking duties to offset the practices.

The ITC is examining possible economic harm to SolarWorld from Chinese imports, while the department determines the penalty for Chinese companies that illegally dump products.

The department may decide on preliminary remedies as early as Jan. 12.

Tariffs may raise the cost of modules by 10 percent, Aaron Chew, a senior analyst at New York-based Maxim Group LLC, said in a Dec. 2 research note.

Trade Remedy

“The United States should avoid abusing trade remedies which will affect bilateral trade and mutually beneficial cooperation between China and U.S. enterprises in the new energy sector,” the Chinese Commerce Ministry said in its statement.

China exported $3.5 billion of solar goods, including solar cells, to North America last year, according to the China Chamber of Commerce for Import & Export of Machinery and Electronic Products. North America is China’s third-biggest solar export market, following Europe and Asia in 2010, accounting for about 11 percent of China’s global solar exports.

Unfair Competition

Democratic lawmakers wrote a letter on Dec. 2 to President Barack Obama urging an investigation into the Chinese imports, which they say don’t fairly compete with domestic products.

Imports of Chinese solar products have more than quadrupled from 2008 to 2010, lawmakers said in the letter. Chinese imports control half the market, benefiting from government-provided loans, cheap land, tax breaks and an undervalued currency, the lawmakers, including Senator Ron Wyden, an Oregon Democrat, and Representative Edward Markey, a Massachusetts Democrat, said.

SolarWorld and six other companies that haven’t been publicly identified have requested tariffs of 100 percent, saying Chinese solar manufacturers benefit from unfair government support.

The U.S. group asked the federal government to slap duties on more than $1 billion of Chinese imports.

China’s Commerce Ministry said on Nov. 25 that it would begin its own investigation into American state support for renewable energy and would consider the stimulus programs of the states of Washington, Massachusetts, Ohio and California, and two others in New Jersey.

Renewable Energy

Representatives of Chinese companies told the commission Nov. 8 that tariffs sought by U.S. competitors would make it more difficult to expand the use of renewable energy. China and the U.S. are among nations encouraging use of alternative energy sources, driving costs down across the board, so it would be unfair to penalize China, they told the panel.

SolarWorld said Sept. 2 that it was cutting almost 200 jobs at its facility in Camarillo, California. Solyndra LLC, a California maker of solar panels that received $535 million in U.S. loan guarantees, blamed cheap Chinese imports for its collapse. Solyndra filed for bankruptcy on Sept. 6.

“There’s a serious concern going forward with the current situation,” Gordon Brinser, the president of SolarWorld’s U.S. unit, said in a Dec. 1 interview before the ruling. “SolarWorld is a strong company, but others in the industry are struggling.”

Objective Analysis

The Commerce Ministry said yesterday it hopes the “U.S. side will objectively analyze the reason why some of U.S. solar panel firms lack competitiveness”.

Attorneys for Suntech Power Holdings Co. Ltd. and Trina Solar Ltd., two of the biggest China-based makers of crystalline silicon panels, told the trade commission Nov. 8 that added tariffs would increase the cost of solar panels, which would then be passed on to the consumer.

Chinese solar manufacturers have said they may shift manufacturing to other countries to avoid tariffs if they’re imposed.

Executives at four of China’s biggest solar-panel makers have said they don’t receive special treatment from the Chinese government and that they pay higher interest rates for loans than U.S. or European competitors.

SolarWorld has said that China’s rapid growth in solar products is possible only with government support as it seeks to push out U.S. competitors by selling products for less than cost.

“If they continue at the rate they are going, it’s not a sustainable situation,” Brinser said.

Chinese Credit

China provided $30 billion in credit to its biggest solar manufacturers last year, about 20 times the amount provided by the U.S., Jonathan Silver, executive director of the Energy Department’s loan program, told a congressional panel Sept. 14. Silver resigned on Oct. 6.

First Solar Inc., based in Tempe, Arizona, and SunPower Corp., based in San Jose, California, may benefit from higher sales prices stemming from the tariffs, Ahmar Zaman, an analyst at Minneapolis-based Piper Jaffray Companies Inc., wrote in a Dec. 1 research note.

First Solar isn’t involved in the ITC case, spokeswoman Melanie Friedman wrote in an e-mail Dec. 2. SunPower is neutral, Chief Executive Officer Thomas Werner said in a Nov. 30 presentation at the Baird Clean Technology Conference.

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

A number of sites would love to lay claim to the title “The LinkedIn of China.” Especially LinkedIn itself. Its very survival could depend on it.

To be the “X of China” is a coveted position, in a country that has seen explosive Internet growth–450 million online today, more than the entire U.S. population. There’s Renren, for instance, the Facebook of China, and Weibo, the Chinese Twitter. In the wake of LinkedIn’s barn-burning IPO, though, a question comes to mind: Who will be the LinkedIn of China? The answer to that question could have a huge impact on LinkedIn’s future–like whether it lives or dies. Let’s explore why.
Online professional networking in China is a slightly different game than friending and tweeting, it turns out. The original Facebook and Twitter have been banned in China, blocked by the censors standing guard atop the Great Firewall. But LinkedIn, unique among the major social networks, has so far been allowed to operate in the Middle Kingdom. In other words, while Facebook can’t be the Facebook of China, there’s a fighting chance for LinkedIn to become the LinkedIn of China.
It has stiff competition, though. Take Ushi, for instance. Pronounced “you-shee” (which means “outstanding professional”), the site is the first major online professional network “made in China, made by Chinese, made for Chinese,” as its CEO told Reuters yesterday. Ushi, which launched in invitation-only private beta in March of 2010, had grown to 60,000 users just by user invites by October. Today, it has 300,000, and CEO Dominic Penaloza, a Filipino-Chinese raised in Canada, projects hitting 10 million users in two years. (Here’s Penaloza’s, um, LinkedIn profile, in which he writes that he’s “building a social Internet service that really words.” Awkward…)
Why does the “by Chinese, for Chinese” conceit matter so much? Because business is done differently in China, of course. Some of the norms on LinkedIn–the sort of free-for-all egalitarianism, where the guy in the mail room can potentially send an InMail to the CEO, if he ponies up a couple bucks–won’t necessarily fly abroad. Penaloza told Reuters that in Chinese business, face-to-face meetings are greatly preferred, and doing business with strangers is distrusted, meaning a large part of Ushi’s mission is actually leveraging the social network to facilitate offline connections (making it something like the MeetUp of China, too). Ushi raised $1.5 million in a first round of funding, and about 5% of its user base are chief executives–a demographic key to monetizing the site.
Ushi, though, isn’t even the leader in the race for the “LinkedIn of China” mantle. Currently, the front-runner looks to be Tianji, first founded in 2005, and now a part of the French company Viadeo. As Viadeo’s CEO recently explained to Fast Company, its strategy has been to address the cultural sensitivity issue by acquiring leading LinkedIn-like companies in various markets and letting those folks on the ground navigate questions of cultural tact in building up the service. Tianji told Reuters it intended to hit the 10-million-user mark by the end of this year–about a year and a half sooner than Ushi projects. (Ushi does have a head start on monetization, though; whereas Tianji hasn’t yet begun, Ushi already charges for some features.)
The rise of Ushi and Tianji should be especially troubling to LinkedIn, since the site has singled out international competition as a source of worry in the section on risks and challenges in its S-1 filing.
“Expanding internationally may subject us to risks that we have either not faced before or increase risks that we currently face,” reads the document, “including risks associated with…increased competition from local websites and services, that provide online professional networking solutions, such as Germany-based Xing and France-based Viadeo, who may also expand their geographic footprint.”
And there is also, of course, the possibility that the Great Firewall, which has proved to be semi-permeable in LinkedIn’s case, might suddenly go rigid against the American interloper. In fact, the company got a brief taste of what that might be like back in February. The site temporarily was blocked to users in China. It was widely speculated that Chinese authorities feared that communication features on LinkedIn could facilitate the so-called “Jasmine Revolution” that some Chinese were calling for in the wake of the unrest across the Arab world.
Unless LinkedIn feels like accommodating an enduring element of the Chinese way of doing business–kowtowing to censorship–its days behind the Great Firewall could be numbered altogether.