Quotes of the Day

The share price of German pharmaceuticals titan Bayer AG slid 26% last week — at one point touching a 10-year low. The reason: lawyers claimed to produce a "smoking gun" in their lawsuit against the company's American arm over the cholesterol-lowering drug Lipobay (also known as Baycol). Bayer voluntarily withdrew the drug from the market in August 2001, when it was linked to rhabdomyolysis, a muscle-destroying condition that can be fatal. But attorneys last week produced excerpts from correspondence between executives at Bayer and GlaxoSmithKline from 1997, which warned that "simple and safe no longer appears to be a viable promotional platform" for the drug. In 1999, U.S. regulators warned that Bayer's marketing of the drug, which was later revised, was "false, lacking in fair balance or otherwise misleading." Bayer says the warning was routine and the correspondence was taken out of context. But analysts worry that if the trial proves Bayer knew about the risks associated with Lipobay long before withdrawing the drug, the company could lose its insurance cover on judgments that could cost the company billions. Bayer claims that improper prescriptions caused the condition, in which muscle cells disintegrate and release toxic chemicals into the blood, sometimes leading to liver and kidney failure. It also insists that each case is unique and will have to be dealt with individually. But Munich attorney Michael Witti has already joined Chicago lawyer Kenneth Moll and others in petitioning a U.S. court to let them file a class action lawsuit on behalf of 6,800 people, many from Germany. And even if Bayer fends off the U.S. class-action suit, they may still face legal headaches in Europe: the state prosecutor in Turin, Italy, is pursuing a criminal investigation against the company for marketing and selling flawed medicine.

Japan Chucks in Its Clogs
It's difficult to imagine how an amusement park built around windmills and giant wooden shoes could fail, but last week Huis Ten Bosch, a Dutch theme park in Nagasaki, Japan, became the country's third largest bankruptcy this year, with liabilities of $1.95 billion. With unemployment at record highs, people in the world's second-biggest economy are in no mood to play; indeed, the once-booming leisure industry is also responsible for the country's two largest bankruptcies. The fall of Huis Ten Bosch is most significant because it highlights Japan's banking crisis. Its main creditor and the world's biggest bank in terms of assets, Mizuho, says the failure will not affect its forecasts — not reassuring since the bank is forecasting the biggest loss in Japan's corporate history, at least €15.7 billion. Like other top banks, which have at least €188 billion in bad loans, Mizuho is in a desperate race to raise capital, but investors are balking. There may be hope: last week Japan's Prime Minister named a new team to head the central bank, and although some members have questionable deflation-busting credentials, they all advocate forcing banks to acknowledge their full losses, even if it then takes a public bailout to save them. That would be welcome in a country where the response so far has been tilting at windmills.

Rank and Bile
Size matters, Brits crowed, when the U.K. overtook France in 1999 to become the world's fourth-biggest economy. But with the British pound down nearly 5% against the euro since January, and the U.K.'s £1 trillion gross domestic product falling in value against France's GDP as a result, the French may soon be able to claim it was a grande illusion. If the pound falls less than 1% more, to 0.68 to the euro, France will again take the lead. To which Brits will surely reply, "It's really growth that counts."

INDICATORS
Feeling The Tremors
A slate of Europe's battered insurers cut dividends last week, including Aviva, Zurich Financial, AXA and Swiss Re, which trimmed payouts for the first time since the San Francisco earthquake of 1906.

Vote of no Confidence
Spooked by talk of terrorism and war, U.S. consumers lost faith, as confidence plunged to a fresh, unexpected nine-year low. In Britain, confidence slid six points, to its lowest level since 1998.

The Fruit Of The Suit
McDonald's brushes off obesity-related lawsuits as ludicrous, but they must be weighing heavily on some executives' minds. Under a scheme unveiled in the U.K., the golden arches will sell fresh fruit for the first time, with sliced apples and oranges for about 31 per bag — or as a substitute for fries in children's Happy Meals.

THE BOTTOM LINE
'When I came here the debt mountain looked like the Himalayas. Now it's like the Matterhorn'
PETER VOSER, financial director of Swiss-Swedish engineering group ABB, putting a brave face on a record $787 million annual loss

• BLAINE GRETEMAN and STEVE ZWICK
• Drugs giant's stock market value slides