No.1 - Big Pharma Is Back

After disappointing earnings from Pfizer (PFE) last week, Merck (MRK) and Schering-Plough (SGP) came out with results this morning that blew away The Street. Shares of Merck jumped nearly 7%. CNBC Pharmaceuticals Reporter Mike Huckman has the lowdown.

Here are excerpts of Mike Huckman’s conversation with the guys.

How real is Merck’s performance?

Very real, Huckman says. Merck has a new diabetes drug called Januvia that’s benefiting from a safety concerns that surfaced last month with the diabetes drug Avandia, which is from GlaxoSmithKline (GSK).

Pete Najarian tells the panel to sell into the news. Take some off the table, he says.

Guy Adami agrees.

Eric Bolling thinks the stock is a buy for technical reasons.

What’s going on with Amylin (AMLN)?

Huckman says The Street may have gotten ahead of itself on this name. Sales of Amylin’s drug Viada came in $8 million light.

Where does that leave their partner in this drug Eli Lily (LLY)?

Lily is one of the biggest diabetes plays in the world says Huckman. He adds that there’s a great deal of speculation on The Street that Lily will buy Amylin – but Lily denies any takeover talk.

Pete Najarian says Amylin is his best diabetes play and reminds the panel that buying a biotech company is very different from buying stock in a pharmaceutical. He explains most biotechs burn money and they’re more attractive as a takeover candidates.

On a related note, Glaxo reports Wednesday and Huckman thinks this will provide the first clear picture of the damage to the $3 billion Avandia franchise.

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Trader disclosure: On July 23rd 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (EMC), (INTC), (HAS); Najarian Owns (CLX), Najarian Owned (CLX) on 7/20/07; Bolling Owns (BP), (XOM), Gold, Silver, Copper, Platinum; Bolling Is Short Crude Oil