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Deinite results can be obtained through merging
with, or acquiring, a company. The R&D race is

now being played all the way from the laboratory
to the trading loors.

But there is a catch. According to SSR’s

conclusions, relying on M&As would ulimately

increase R&D ineiciency:

“We know that larger companies are less
producive at R&D, on average,” says Dr. Evans. “In

order to back that up we looked at the economic
returns for R&D spending, which is the amount

of earnings produced for a given amount of R&D
expenditure, and we compared that to the size of

the company. By puing two companies together
you create opportuniies for cost savings, and it

buys you some ime by taking out excess cost, but
there’s no long lasing savings or earnings.”

And if all else fails, they just raise their prices. In this
environment of pervasive inancial ineiciency

customers seem to be bearing the weight of the
industry’s crisis. “For many companies this is

their primary or only source of revenue growth,”
said Dr. Evans. “But no company or industry
“
can raise its price in real terms forever.” The
expiry of patent rights, coupled with poor R&D

results, leads companies to rely more heavily on
products whose patents they sill hold. According

to Bloomberg, since October 2007 prices have Since October 2007 prices have doubled

doubled for drugs to treat maladies that range ”for drugs to treat maladies that range
from muliple sclerosis and cancer, to blood

pressure and erecile dysfuncion.
from muliple sclerosis and cancer, to

Finally, there is tax minimizaion. Pizer’s interest blood pressure and erecile dysfuncion.
in AstraZeneca went beyond their promising

cancer therapy drugs. The United Kingdom’s tax
regime is much more favorable to companies like

Pizer than the American company’s homeland,
hence the interest to reach across the Atlanic.
om
s.c
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Yet corporate hubris ulimately makes headlines hot
and controversy lares when the race to cut costs p

becomes underhanded. On May, Chinese police
charged the former boss of GlaxoSmithKline’s It aims to end markeing campaigns for opioid- Poliical fallout from controversy and harsh

China business, Mark Reilly, with corrupion and based painkillers, which have contributed to more criicisms atracts more atenion than the
tax evasion. It’s the largest tax scandal to hit a than 16,651 deaths, according to the US Center for structural, underlying problems that oten

foreign company in China since 2009, when Disease Control and Prevenion and targets Johnson moivate immoral pracices. Both, nonetheless,
four execuives of Rio Tinto were jailed for & Johnson’s Jansenn Pharmaceuicals, Actavis, are linked because of the impact ineicient

bribery.
Endo Health Soluions, Purdue Pharma, and Teva corporate strategies have had on industry
Pharmaceuical’s Cephalon. A similar lawsuit was revenues during the past decade and a half.

Nonetheless, the most sensiive controversies iled by the City of Chicago in June against the same While addressing the pharmaceuical crisis, the

for customers are usually linked to unsafe drugs companies, for creaing opioid addicion through great inancial race to make up for R&D failings
or the improper inluence on doctors and media their painkillers, and thus raising health costs for is creaing an M&As spree, dodgy tax schemes,

to promote certain treatments. The latest began the city. Some predict it could become a legal batle and regular price hikes. This trend seems to be,
in the last week of May, in California, where two similar to the one fought against tobacco companies simply, unsustainable.

counies (Santa Clara and Orange) iled a lawsuit.
two decades ago for promoing substance addicion.

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