We show that in a pure cost-of-carry environment, there are few economic benefits for either type investor from listing serial month contracts in addition to quarterly expirations.
Decreasing the number of listed expirations should increase market liquidity and lower trading costs.
For many investors, their portfolio is marked to market on a quarterly basis, and they may be inclined to use quarterly month expirations.
Prior to late 1984, option expirations on a particular underlying stock occurred only in the months of the cycle to which the stock was assigned.
Under the new system, option expirations on a given underlying stock are available in the current month, the following month and the next two months of the expiration cycle to which the stock is assigned.
Our study covers 1983 through 1985, the most recent period during which quarterly expirations were the dominant regime.
The last 37 expirations
have resulted in an average return of 0.
Two key issues that Fitch closely monitored during 2006 were the effects of the initiation of Medicare Part D under the Medicare Prescription Drug Improvement and Modernization Act of 2003 and the start of a new wave of brand-name pharmaceutical patent expirations in the U.
Key drivers determining drug pricing and volume trends are the second year of Medicare Part D programs, brand-name drug patent expirations paired with rapid generic substitution rates, and possible increased political pressure from the change of political control of Congress.
Next year marks the start of a wave of potential branded-drug patent expirations that will negatively affect branded pharmaceutical sales yet contribute to generic drug sales through the intermediate term.
These hurdles include the above-mentioned Medicare Part D and product portfolio gaps created by drug patent expirations as well as other intellectual property challenges, product liability exposure, and commercialization of late-stage R&D projects in light of heightened drug safety awareness.
Fitch notes that the potential loss in revenues associated with Celebrex and Bextra comes at a time when the company is facing near-term patent expirations on other key franchises such as Zithromax ($1.
Despite the loss of cash flow related to the Cox-2 drugs and pending patent expirations, Fitch anticipates that Pfizer will still continue to generate free cash flow (net cash flow from operating activities less capital expenditures and dividends) in excess of $5 billion.
Bristol-Myers is facing many operational challenges in the intermediate term, most notably significant pharmaceutical product patent expirations through the end of 2006, and the company's reliance on commercialization of its late-stage R&D pipeline to offset potential revenue and earnings declines from the patent expirations.
The company is in the midst of a transformation of the pharmaceutical product portfolio, which represents approximately 70% of total company sales and 80% of total EBITDA, to replace lost revenues and earnings due to possible generic competition after drug product patent expirations of three of the company's top-5 products, Taxol (U.