For students of perverse incentives created by tax, it is a bonanza week. Apple has raised $12bn in bonds to buy back shares, despite having $130bn sitting in cash overseas, and Pfizer wants to turn itself into a UK-domiciled company by acquiring AstraZeneca for £60bn.
We have been presented this week with two visions for the future of innovation in the pharmaceuticals industry. One is encouraging, the other is not.
What is a doctor’s job? Is it: a) to diagnose illness; b) to treat patients; or c) to persuade other doctors to prescribe a brand-name pill? To those answering c), here is an additional question: do you work for a pharmaceuticals company?
This time last year, I wrote a New Year column with seven predictions for events that would occur in business in 2011. It is time for reckoning and I must say that I scored poorly, with only three out of seven correct.
To be fair to me, the predictions were deliberately provocative. As I noted at the time: ”They are intended to be adventurous enough to be interesting – even if I turn out to be wrong, they should at least be things to watch.”
I was at least right about that. With no more excuses, let’s take a look at my predictions and what happened. Read more
One common public perception of business – as I blogged earlier this week – is that the bigger it is, the worse it is. I was interested, therefore, to read in The Times on Friday that Britain’s top 50 businesses are to get a “hotline” to senior ministers. The paper writes (subscription required):
Bosses of companies, including BP and GlaxoSmithKline, will be able to telephone directly to the top of Whitehall departments in new individually tailored relationships with senior ministers who will act as their “buddies”.
At last, a bit of perspective on tax avoidance.
Andrew Witty, chief executive of GlaxoSmithKline, says something is lost when companies switch tax domicile on a whim. The pharma boss tells The Observer:
One of the reasons why we’ve seen an erosion of trust broadly in big companies is they’ve allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is.
Further to my column on Avandia suggesting that politicians should leave it to properly qualified regulators to decide on drug safely, the FDA advisory committee considering the anti-diabetes drug this afternoon decided against recommending that it is taken off the market.
That is something of a slap in the face to the politicians who I believe got ahead of themselves in declaring Avandia to be “a dangerous drug”, in the words of Rosa DeLauro, a Democratic member of the House of Representatives last month. Read more
Avandia, the GlaxoSmithKline anti-diabetes drug that could be taken off the market by the US Food and Drug Administration, is yet another illustration of the difficulties facing pharmaceutical companies in refilling their pipelines with blockbuster drugs.
Avandia’s fate seems already to have been sealed, since sales have been dropping since a 2007 study found an associated risk of heart attacks. If it was removed from the market, it would be the highest profile such event since Merck withdrew its painkiller Vioxx in 2004 on similar concerns. Read more