What institutional investors do is perfectly legal. They are not even reviewed by competition authorities as long as an investor such as BlackRock keeps its shareholding at less than 10 percent in a pharma firm. They are classified as passive investors.
But knowing who the shareholders are and their stake in rival companies, the pharma executives can end up working in the interest of common institutional investors, they said. This is because economic theory clearly indicates that intense price competition between firms that share the same owner, ultimately reduces the profits of the common owner. Institutional investors having a stake in multiple Big Pharma firms at the same time may hamper efforts to find new medicines for diseases.
Pharmaceutical companies spend considerable sums of money on bringing new drugs to the market. They prefer monopolies and resist the entry of generic makers. Where the Big Pharma faces difficulty in acquiring generic makers such as those in India, it refuses to share patents and knowhow even during a health emergency like was seen recently in the run-up to make Covid vaccines.
The involvement of institutional investors might also be having an impact on how pharma companies reward their shareholders.
Pharma companies have become money-making machines and this is evident from the massive increase in returns they have given to their shareholders in the past two decades. For instance, companies use the strength of their balance sheets to borrow money from banks and then use the cash to buy their own shares from the stock market.
Such share buybacks inflate the value of the remaining stock, consequently increasing the net worth of the largest shareholders. Emerging markets accounted for Sanofi announced that its consumer healthcare business will be established as a standalone business while divesting its stake in Regeneron.
The company signed agreements with Roche for the over-the-counter OTC rights to Tamiflu for the prevention and treatment of flu and with Eli Lily for rights to Cialis for erectile dysfunction.
It is also collaborating with the Biomedical Advanced Research and Development Authority to develop a vaccine and with Luminostics to develop a self-testing solution. Image courtesy of AbbVie Inc. AbbVie recorded a 2. The US market accounted for The acquisition is expected to deliver significant cash flow and diversify its revenue base. The company also signed license agreements with Reata Pharmaceuticals, Calico Life Sciences, and Alector to develop therapies for various indications.
Takeda recorded a Gastroenterology products accounted for Takeda expects COVID to cause reduced operations and decreased product demand due to fewer patient visits to hospitals. The company is part of the CoVIg alliance and is involved in the development of a hyperimmune globulin treatment for the coronavirus disease.
Existing internal drug candidates are also being explored to test their safety and efficacy against the coronavirus. The pharmaceutical service segment accounted for SPH collaborated with a number of colleges and universities during the year for the development of new drugs and therapies.
It also formed a joint venture with Russian biopharmaceutical company BIOCAD for the development of biopharmaceutical products and signed co-operation agreements with Alembic and Adia, both based in India. The company inked an agreement to in-license a new stroke medication, LT, from Lumosa Therapeutics, a company based in Taiwan. By the early s, a new monster had emerged: an emboldened, triumphant, and fully financialized Pharma.
To understand financialized pharma, just look at what it does with its money. Drug companies have spent the vast majority of their profits in recent years on share buybacks that maximize immediate share value. This is the backstory to every drug pricing scandal in memory. Between and , companies owned in part by hedge funds, private equity, or venture capital firms produced 20 of the 25 drugs with the fastest-rising prices. Occasionally their role in price-gouging has received public attention.
In , for example, Bill Ackman of Pershing Square Fund oversaw flagrant price-inflation schemes at Valeant as part of a failed takeover of Allergen. But usually the involvement of hedge funds in price hikes goes unnoticed. Mylan then started spiking the price on EpiPens, swelling revenues and inflating share price. Public outrage, most of it targeting the CEO, ensued; Hillary Clinton even tweeted about it on the campaign trail.
But for Mylan, the only audience that mattered was its industry peers and Wall Street. Although the drugs were developed in a NIH-funded lab at Emory University, Gilead was able to set the price at six-figures, leading to extreme Medicaid rationing and effectively sentencing millions of Americans to early deaths.
But such images tell only half the story. Whether an invention is done at the NIH or UCLA, there is also an obligation to ensure the drug is available to the public on reasonable terms. Of course, a long run of NIH administrators, answering to a long run of Secretaries of Health and Human Services, have chosen to ignore these requirements.
Among trade groups, only the National Association of Realtors and the Chamber of Commerce spent more. This has not only fostered cozy relationships between industry and Congress, but also the private sector and the NIH. This has left activists with one option: legal action.
Love notes that there are multiple legal mechanisms on the books the government could use to drive down the cost of drugs. Along with powers enumerated in the fine print of Bayh-Dole, it can invoke Title 28 Section of the U. Code, which grants the government power to break patents and license generic competition in the public interest. In practice, it would likely be a bit more. Is there any chance that Alex Azar, of all people, could be the first HHS chief to keep these long-ignored promises to the public?
And yet, Azar has raised the issue of patent abuses, and made noises about enforcing existing laws to stop drug makers from gaming the system and suppressing generic competition. Whether this administration tries to solve the drug crisis, or leaves it for a future administration, any real fix will require rejecting the myth that controlling prices stymies innovation by cutting into bottom lines.
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