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JANUARY 19, 2004
Edited by Ira Sager Talk Show "We need to make our immigration laws more rational, and more humane." -- President George W. Bush, proposing new laws for immigrants India's Next Outsourcing Coup: Drugs For years, software companies have slashed costs by hiring inexpensive programmers and engineers in India. Now Big Pharma is discovering the same benefits. Pfizer (PFE ), GlaxoSmith-Kline (GSK ), and Novartis (NVS ) are tapping into India's research and manufacturing prowess to cut costs and speed development of new drugs. That's a big change for India. Foreign drugmakers have long shunned the country because of its lack of patent protection. But on Dec. 22, the Indian government introduced a bill that would toughen intellectual-property rules. If passed, it could help double the drug-outsourcing business, to $800 million, by 2005, says Bombay brokerage Kotak Institutional Equities. A host of Indian players already are in the outsourcing game. Hyderabad-based Divi does chemical synthesis for Merck (MRK ), Abbott (ABT ), and Glaxo. In Bangalore, Biocon has 300 scientists doing contract research, up from just 25 in 2000, after sealing deals with Pfizer, AstraZeneca (AZN ), and Bristol-Myers Squibb (BMY ). While these contracts are just a fraction of the global pharmaceutical business, expect many more such deals as India becomes competitive in yet another knowledge industry. By Manjeet Kripalani   Can Google Dodge Linux Litigation? Web search giant Google may be one of the next targets of litigious SCO Group (SCOX ). The tiny Utah software company is suing IBM over claims that the Linux operating system sold on Big Blue computers infringes on SCO's software copyrights. BusinessWeek has learned that SCO lawyers have contacted Google, which uses an estimated 10,000 Linux computers to handle 200 million search requests each day. SCO Chief Executive Officer Darl McBride may be making good on a threat to sue companies that use Linux to run their business. SCO has been trying to get Linux users to pay a license fee. McBride says a team of SCO execs and lawyers have been engaged in "back and forth" discussions with Google. He declined to characterize them but claims Google has benefited from using the free software. "They've been able to operate a low-cost [business] model because of Linux," says McBride. "Well, if your model is going to hold up, you better make sure you don't have any infringing code in there." Google declined to comment. McBride has picked the right time to go after Google. With a blockbuster initial public offering likely by spring, Google may want to avoid a public spat. By Jim Kerstetter  GM: On The Road To Russia General Motors (GM ) is stepping on the gas in Russia. Starting next fall, it will make the Opel Astra at its plant in the southern Russian town of Togliatti, where it has a joint venture with local carmaker Avtovaz. The plant has been making four-wheel-drive Chevrolet Nivas since September, 2002, to meet Russia's demand for rugged off-road vehicles. Russian automotive tastes are changing. The more expensive Astra was designed for Western European roads and incomes. But demand for new imported Western cars in Russia jumped 40% in 2003, with the strongest growth for cars priced from $10,000 to $15,000. Last year, GM sold 3,312 Astras in Russia, twice as many as in 2002. Although GM has yet to decide on pric-ing, analysts expect the locally produced Astra to start at $11,000. "Russian incomes are growing and people can afford to buy much more expensive cars," says analyst Elena Sakhnova of Moscow invest-ment bank United Financial Group. GM plans to produce at least 25,000 Astras and 70,000 Nivas a year in Russia by 2005. GM had better hope Russian incomes keep pace. By Jason Bush Your Undivided Attention, Please In the Wild West, you had to check your gun at the door. At eBay (EBAY ), senior management must give up their high-tech gadgets. Fed up with being interrupted by her staff taking cell-phone calls and reading e-mail on their handhelds, CEO Meg Whitman recently banished wireless devices from her Monday staff meetings at eBay's San Jose (Calif.) headquarters. Whitman says there was "a little grumbling" from the eight top execs who regularly attend the meetings. "Personal interaction is much more important than instantly answering e-mails," she says. Message received, loud and clear. By Robert D. Hof Counting Your Dividends There's a new tool for vetting dividend-paying stocks: the Dividend Achievers Index from financial-data outfit Mergent. This weighted index of 283 companies is tallied by the American Stock Exchange and can be tracked through ticker symbol DAA. Over 10 years, it would have beaten total returns -- stock gains and dividend payouts -- for the Standard & Poor's 500-stock index by 1.5% a year. That, along with new tax laws, helps explain dividends' renewed appeal: Investors will net 60% more dividend income in 2004 than in 2002. By Brian Hindo The Numbers Game (.pdf) Click here for a pdf version of The Numbers Game
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