PBT Transcript (4/15/2008)

MIKE ARMSTRONG: Coming up: We’ll tell you why the price of Nexium probably won’t be going down any time soon. It involves patents and an Indian drug maker. The economy may be bad but not all retailers are throwing in the towel. We’ll tell you why dollar stores are looking to expand. And a local legend in the construction business has died. Philadelphia Business Today starts now.

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MIKE ARMSTONG: It’s a deal AstraZeneca shareholders will love, but Congress and heartburn sufferers will blast. The British maker of Nexium employs thousands in northern Delaware and it has ended a dispute with ’s Ranbaxy. Under the agreement, Ranbaxy agrees to delay the release of its generic version of Nexium by six years. Usually, when a generic version is launched, the price is substantially less than the brand name drug. Why did Ranbaxy do it? It gets the right to formulate part of the product for several years.

Retail has been hurting with the downturn in the economy, but if you think that means the big chains are halting plans to open new stores, you’re not thinking like a retailer. When the economy slumps, some retailers try to take advantage of low rents, and tie up land for expansion. Dollar Tree Stores is looking for 20 more sites in the Philadelphia area and the company that runs T.J. Maxx and Marshall’s Clothing Stores is looking to open 45 stores this year. Inquirer reporter Joe DiStefano has been talking with store operators and the real estate brokers who are finding them new locations. I spoke with him earlier today.

Do discount stores benefit in an economic slowdown or a recession?

JOE DISTEFANO: That’s real interesting. If you look at what’s happened to retail stocks over the past year, J.C. Penney’s and Sears are trading at half the levels that they were. Target’s under some pressure. On the other hand, Wal-Mart and TJX are actually worth more now than they were then. The theory is that shoppers are moving downmarket, that they won’t make that bigger purchase in a department store when they’re not sure about their job or when they can’t borrow money against their house, they’re going to move down a little further to the discount store. Problem with that is, if you move a little further down the scale, you expect to see that with the dollar stores and you don’t really. Their cost-to-goods sold is going up a little bit. The expectation is that it may go up a whole lot more as goods from become more expensive. But…y’know, they’re reporting that their sales have also been affected during the slowdown, rather than people flooding the dollar stores. There’s some issues there.

MIKE ARMSTRONG: What kind of stores are pulling back?

JOE DISTEFANO: You’re not seeing a lot of new occupancy at the big shopping malls. You see a lot of the shopping mall operators a little bit concerned over whether this is a- you know, the best time to expand. It’s a good time to renovate. But you’re not seeing a lot of the big anchor department stores taking new space around here.

MIKE ARMSTRONG: The suburban developer who built the Valley Forge Convention Center and the nearby Sheridan Hotel in the 1970s has died. Leon Altemose gained fame, some would say infamy, for defying the construction trade unions by using non-union labor on his projects. Altemose died Friday at his home in Malvern. He was 68.

That’s it . At the Inquirer, I’m Mike Armstrong for Philadelphia Business Today.

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