Analyst cuts IMS target on data privacy questions

NEW YORK - A Credit Suisse analyst cut his price target on shares of IMS Health Inc. on Friday, saying the market research company's products will become less valuable if U.S. states follow New Hampshire's lead by making prescription data private.

Glen Santangelo lowered his target to $15 per share from $19. He said IMS's products targeting salespeople won't be worth as much to customers if the company can't collect data about the prescribing habits of individual doctors. That would lead to tougher price negotiations for the company, he said.

On Nov. 18, the 1st U.S. Circuit Court of Appeals upheld the New Hampshire Prescription Information Law, which makes prescribing information confidential. It overruled a lower court in doing so. Santangelo said 20 states have considered similar laws over the last few years, but none had successfully banned the practice.

IMS and two competitors are trying to have the law deemed unconstitutional as a violation of the right to free speech.

A court ruling on a similar law in Vermont is due by the end of 2008, Santangelo said, and in the future other states could pass laws with the same goal. IMS said it successfully appealed another prescription law in Maine, and to date, none of the laws have gone into effect.

In a telephone interview, IMS spokesman Phil Oliva said the market research companies have until Dec. 15 to request a rehearing of their case before the 1st Circuit. He said no decision has been made on what the plaintiffs will do.

Santangelo kept a "Neutral" rating on IMS shares, which lost 24 cents to $12.75 in afternoon trading. The analyst said it is not yet clear what IMS will do to stay within the law.

IMS shares fell 8.7 percent on Nov. 18, and set an annual low in the day that followed, but the stock has more than recovered since that time.

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