The public has been told that pharma needs money to develop new drugs, but unfortunately, that’s a huge lie. As biopharmadive recently, “some of the biggest pharmaceutical companies, sitting on large and growing sums of cash, are funneling those funds into major share buyback programs and acquisitions of smaller biotech companies.
On Thursday, Swiss drug-making giant Novartis announced plans to buy back up to $15 billion worth of its shares by end of 2023, a program it will fund with proceeds from the recent sale of its long-held stake in crosstown rival Roche for nearly $21 billion. Three days earlier, Bristol Myers Squibb announced a similarly sized share buyback plan for the next few years.
By the end of next year, more than a dozen of the largest pharmaceutical companies will have more than $20 billion in cash, and six will hold between $30 billion and $70 billion, according to estimates from SVB Leerink, an investment bank.
PhRMA, the political lobbying arm for the pharma industry, has been spewing lies about a plan to have Medicare negotiate drug prices with big pharma. Interestingly, pharma has been cutting R&D because it is less expensive to buy a small biotech company with products in development.
I am not naive. I understand that big business’s main objective is to make money but to continually lie to the public while the industry is raking in so much money and using profits to buy back stock is unconscionable.
I thought it was me, but I have been talking to my contacts throughout the industry, and they all say that toe focus has moved from helping patients to challenging ROI targets. As one person told me, “Rich, it’s becoming big business and all about the balance sheet.”
The public has a right to be angry, and pharma should be held accountable. It’s time to stop drinking the Kool-Aid if you work in the industry and take a stand against greed.