As the New York Times reports, when Big Pharma companies are under fire for skyrocketing drug prices, they would like you to believe that prices have to be so high to support research and development (R&D). But is that the truth?
1. What did the authors of the new study find that the 18 pharmaceutical companies in the S&P 500 spent their profits on between 2006 through 2015? Discuss the breakdown.
2. Which particular companies spent more on stock buybacks than on new drug research? Give details in your answer.
3. Discuss value extraction versus long-term strategies to combat the next big medical crisis. What are the prospects for drug innovations if this trend continues?
4. Develop an analogy that explains the strategic significance of this trend.
Morgensen, G. (2017). Big Pharma Spends on Share Buybacks, but R&D? Not So Much. The New York Times, July 14 (Retrievable online at https://www.nytimes.com/2017/07/14/business/big-pharma-spends-on-share-buybacks-but-rd-not-so-much.html)