How often do you hear about Dodge & Cox, SSgA Funds Management, BlackRock, Mawer Investment or The Vanguard Group? Well, if you recently popped a Tylenol for a headache, took a Lantus insulin shot or got your kid a flu shot at the local clinic - then you’ve probably come across these investment funds as they own the pharmaceutical firms that made those drugs.
“Public companies are increasingly owned by a handful of large institutional investors so we expected to see many ownership links between companies — what was more surprising was the magnitude of common ownership,” the authors told“We frequently find that more than 50 percent of a company is owned by ‘common’ shareholders who also own stakes in rival pharma companies.”
“The increase in connectivity between brand firms may also affect drug prices. 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.” To counter such competition, large industry players such as J&J, Pfizer, Novartis and Merck have bought stakes in generic drug companies like Perrigo.
“Payouts to shareholders have increased by almost 400 per cent — from $30 billion in 2000 to $146 billion in 2018,” the Amsterdam-based Centre for Research on Multinational Corporations said in aPut another way, the return to shareholders went up from 88 percent of investment in R&D to 123 percent in the same period.