24.
Druggernaut Rules
Big Pharma Boom - Even As The World Slows Down
Pharmaceuticals rank as the most profitable industry, again. In a year that saw a drop in employment rates, a plunge in
the stock market and symbols of Global economy literally come crashing down, the pharmaceutical industry continued its reign as the most profitable industry in the annual Fortune 500 list.
While the overall profits of Fortune 500 companies declined by 53 percent - the second deepest dive in profits the Fortune 500 has taken in its 47 years - the top 10 U.S. drug makers increased profits by 33 percent.
Collectively, the 10 drug companies in the Fortune 500 topped all three of the magazine’s measures of profitability in 2010, according to Fortune magazine’s annual analysis of World’s largest companies.
These companies had the greatest return on revenues, reporting a profit of 18.5 cents for every $1 of sales, which was eight times higher than the median for all Fortune 500 industries and easily more than the next most profitable industry, commercial banking (13.5 percent return on revenue).
The drug industry also dominated others by realizing a return on assets of 16.5 percent - almost six times the median (2.5 percent) posted by all industries. Pharmaceutical companies completed the sweep with a return on shareholders’ equity (33.2 percent) that was more than three times the median of all Fortune 500 industries (9.8 percent).
Fortune 500 drug companies attained this triple crown, in part, by hiking pill prices, advertising some medicines more than Nike
shoes and spending much less than the industry has suggested on R&D.
In addition, through its huge lobbying presence in Washington, D.C. the drug industry staved off congressional efforts to moderate rising drug prices. In fact, the industry went on the offensive last year in Congress, fighting for lucrative extensions of monopoly patents on drugs like Cipro, the antibiotic used to treat anthrax.
Congress was all too willing to help, as it approved a patent extension program for pediatric drugs that will give drug companies $592 million a year in added profits, according to the U.S. Food and Drug Administration (FDA). (The FDA acknowledges that this is a conservative estimate based on a limited sample of drugs.)
No wonder Fortune says that the pharmaceutical industry “showed some impressive gains.”
These gains are nothing new. The latest figures reflect a trend that has been continuing for three decades. In the 1970s and 1980s, profitability of Fortune 500 medicine merchants (measured by return on revenues) was two times greater than the median for all industries in the Fortune 500.
In the 1990s, when the intellectual property protections of the landmark Hatch-Waxman Act kicked in, the drug industry’s profitability grew to almost four times greater than the median for all industries in the Fortune 500.
The industry begins the 21st century with even better prospects - a chronically sick population and annual increases in national spending on pharmaceuticals makes the future for top drug companies look healthier than ever.
Drug companies are recession proof and the best investment bet ever.
the stock market and symbols of Global economy literally come crashing down, the pharmaceutical industry continued its reign as the most profitable industry in the annual Fortune 500 list.
While the overall profits of Fortune 500 companies declined by 53 percent - the second deepest dive in profits the Fortune 500 has taken in its 47 years - the top 10 U.S. drug makers increased profits by 33 percent.
Collectively, the 10 drug companies in the Fortune 500 topped all three of the magazine’s measures of profitability in 2010, according to Fortune magazine’s annual analysis of World’s largest companies.
These companies had the greatest return on revenues, reporting a profit of 18.5 cents for every $1 of sales, which was eight times higher than the median for all Fortune 500 industries and easily more than the next most profitable industry, commercial banking (13.5 percent return on revenue).
The drug industry also dominated others by realizing a return on assets of 16.5 percent - almost six times the median (2.5 percent) posted by all industries. Pharmaceutical companies completed the sweep with a return on shareholders’ equity (33.2 percent) that was more than three times the median of all Fortune 500 industries (9.8 percent).
Fortune 500 drug companies attained this triple crown, in part, by hiking pill prices, advertising some medicines more than Nike
shoes and spending much less than the industry has suggested on R&D.
In addition, through its huge lobbying presence in Washington, D.C. the drug industry staved off congressional efforts to moderate rising drug prices. In fact, the industry went on the offensive last year in Congress, fighting for lucrative extensions of monopoly patents on drugs like Cipro, the antibiotic used to treat anthrax.
Congress was all too willing to help, as it approved a patent extension program for pediatric drugs that will give drug companies $592 million a year in added profits, according to the U.S. Food and Drug Administration (FDA). (The FDA acknowledges that this is a conservative estimate based on a limited sample of drugs.)
No wonder Fortune says that the pharmaceutical industry “showed some impressive gains.”
These gains are nothing new. The latest figures reflect a trend that has been continuing for three decades. In the 1970s and 1980s, profitability of Fortune 500 medicine merchants (measured by return on revenues) was two times greater than the median for all industries in the Fortune 500.
In the 1990s, when the intellectual property protections of the landmark Hatch-Waxman Act kicked in, the drug industry’s profitability grew to almost four times greater than the median for all industries in the Fortune 500.
The industry begins the 21st century with even better prospects - a chronically sick population and annual increases in national spending on pharmaceuticals makes the future for top drug companies look healthier than ever.
Drug companies are recession proof and the best investment bet ever.
India - A Case Study
Notwithstanding the current global economic crisis, India’s pharmaceutical industry and its health care market are expected to grow rapidly in the next few years, according to McKinsey, a global management consulting firm.
Driven by strong local demand, Indian health care market is expected to continue growing close to previously projected rates of 10 to 12 per cent, McKinsey said in its report ‘New Opportunities for US-India Biopharma and Healthcare Collaboration’.
Released recently at the US India Biopharma and Healthcare Summit, the high growth of the Indian health care sector is primarily driven because of domestic reasons.
With average household consumption expected to increase by more than 7 per cent per annum, the annual healthcare expenditure is projected to grow at 10 per cent and also the number of insured is likely to jump from 100 million to 220 million.
Further hospital beds are expected to double from 1.5 per thousand to 2.9 per thousand and the diagnostic laboratories to grow by 20 to 25 per cent. There will be an addition of 3,00,000 to 4,00,000 doctors and another 2,50,000 to 3,00,000 nurses.
Driven by strong local demand, Indian health care market is expected to continue growing close to previously projected rates of 10 to 12 per cent, McKinsey said in its report ‘New Opportunities for US-India Biopharma and Healthcare Collaboration’.
Released recently at the US India Biopharma and Healthcare Summit, the high growth of the Indian health care sector is primarily driven because of domestic reasons.
With average household consumption expected to increase by more than 7 per cent per annum, the annual healthcare expenditure is projected to grow at 10 per cent and also the number of insured is likely to jump from 100 million to 220 million.
Further hospital beds are expected to double from 1.5 per thousand to 2.9 per thousand and the diagnostic laboratories to grow by 20 to 25 per cent. There will be an addition of 3,00,000 to 4,00,000 doctors and another 2,50,000 to 3,00,000 nurses.
Uk Health Secretary Welcomes Greater Collaboration With India On 24th October 2005, Ms Patricia Hewitt MP, Secretary of State for Health, met with captains of industry from India’s health sector to discuss greater collaboration between India and Britain in the healthcare sector. Sonjoy Chatterjee, MD & CEO of ICICI Bank UK Ltd and Chairman of The India Group convened the meeting.
Mrs Hewitt in her formal comments welcomed the emergence of Indian companies and their attention on building partnerships in Britain. She said “We believe that long term relationships are important and recognise that our relations with India have shifted to one where both are seeking to be leaders in the global knowledge economy. There has been an explosion in healthcare services; it is the fastest growing and fastest changing sector in the world and we need to examine ways in which our medical model can be enhanced in this dynamic environment. With this in mind, I am sure our relationship with India can be enormously advantageous.”
So pharmaceutical companies are liking what they see in India. Big pharma is poised for a big role in India.
Abbott Laboratories is leading the charge into the country, which now boasts the 10th largest economy in the world. In one fell swoop, Abbott recently became India’s biggest drugmaker when it bought local generic manufacturer Piramal for $3.7 billion.
With that purchase, three of the largest pharmaceutical companies in India are now foreign multinationals. Outsiders already have 25% of the market, which grew by 16.5% in 2010 to an estimated $8 billion.
The market is expected to double by 2015, when the share of multinationals is expected to approach 50%. Look for at least two acquisitions of local companies in the near future, says one analyst.
Abbott is among those members of Big Pharma that are remodeling operations to suit emerging markets like India. In 2010 the company set up a stand-alone Established Products Division specifically for expanding the market for its well-known pharmaceutical portfolio outside the U.S.
GlaxoSmithKline also wants a bigger piece of the Indian pie. It took an important step when it purchased the pipeline of India’s biggest domestic pharmaceutical company, Dr. Reddy’s Laboratories. Glaxo also has shifted its strategy from a traditional blockbuster model toward driving growth from new products and its consumer business.
Then there are others like Merck, Pfizer and Novartis to name a few, who are competing for their share of the kill in a country already wracked by poverty, corruption and illiteracy.
Abbott Laboratories is leading the charge into the country, which now boasts the 10th largest economy in the world. In one fell swoop, Abbott recently became India’s biggest drugmaker when it bought local generic manufacturer Piramal for $3.7 billion.
With that purchase, three of the largest pharmaceutical companies in India are now foreign multinationals. Outsiders already have 25% of the market, which grew by 16.5% in 2010 to an estimated $8 billion.
The market is expected to double by 2015, when the share of multinationals is expected to approach 50%. Look for at least two acquisitions of local companies in the near future, says one analyst.
Abbott is among those members of Big Pharma that are remodeling operations to suit emerging markets like India. In 2010 the company set up a stand-alone Established Products Division specifically for expanding the market for its well-known pharmaceutical portfolio outside the U.S.
GlaxoSmithKline also wants a bigger piece of the Indian pie. It took an important step when it purchased the pipeline of India’s biggest domestic pharmaceutical company, Dr. Reddy’s Laboratories. Glaxo also has shifted its strategy from a traditional blockbuster model toward driving growth from new products and its consumer business.
Then there are others like Merck, Pfizer and Novartis to name a few, who are competing for their share of the kill in a country already wracked by poverty, corruption and illiteracy.
Americans Drowning in Prescription Drugs
Nearly half of all Americans now use prescription drugs on a regular basis, says Mike Adams, quoting a CDC report of September 2010.
“We are at once the problem and the only possible solution to the problem.”
~Michael Pollan, Second Nature: A Gardener's Education
Nearly a third of Americans use two or more drugs, and more than one in ten use five or more prescription drugs regularly.
The report also revealed that one in five children are being regularly given prescription drugs, and nine out of ten seniors are on drugs.
All these drugs came at a cost of over $234 billion in 2008. The most commonly-used drugs were:
-Statin drugs for older people
-Asthma drugs for children
-Antidepressants for middle-aged people
-Amphetamine stimulants for children
America has become a nation of druggies. The seniors are being drugged for nearly every symptom a doctor can find, children are being doped up with (legalized) speed, and middle-aged soccer moms are popping suicide pills (antidepressants).
Prescription drug addictions are on the rise, too. Prescription drugs are so dangerous that now even the DEA (Drug Enforcement Agency) is hosting “take back your pills” day allowing citizens to anonymously surrender their unused prescription painkillers to DEA agents.
The report also revealed that one in five children are being regularly given prescription drugs, and nine out of ten seniors are on drugs.
All these drugs came at a cost of over $234 billion in 2008. The most commonly-used drugs were:
-Statin drugs for older people
-Asthma drugs for children
-Antidepressants for middle-aged people
-Amphetamine stimulants for children
America has become a nation of druggies. The seniors are being drugged for nearly every symptom a doctor can find, children are being doped up with (legalized) speed, and middle-aged soccer moms are popping suicide pills (antidepressants).
Prescription drug addictions are on the rise, too. Prescription drugs are so dangerous that now even the DEA (Drug Enforcement Agency) is hosting “take back your pills” day allowing citizens to anonymously surrender their unused prescription painkillers to DEA agents.
And It’s Only Going To Get Worse
The percentage of Americans taking prescription drugs is expected to rise even further as the health reform insurance regulations kick in. Much of the bill was specifically designed to favor pharmaceutical industry interests by putting even more people on medication.
“But human deciding what to eat without professional guidance -something they have been doing with notable success since coming down out of the trees - is seriously unprofitable if you're a food company, a definite career loser if you're nutritionist, and just plain boring if you're a newspaper editor or reporter.”
~Michael Pollan, In Defense of Food: An Eater's Manifesto
The mass medication of American citizens has reached a disturbing tipping point where the future of the nation itself is at risk. That’s because pharmaceuticals cause cognitive decline, and once you get to the point where over 50 percent of the voters can’t think straight, you’re trapped in a crumbling Democracy.