Read our new SOMO report: Private gains we can ill afford - The financialisation of Big Pharma

https://www.somo.nl/private-gains-we-can-ill-afford/?noredirect=en_GB

In this report we explore the extent to which the 27 largest pharmaceutical companies - measured by revenue in 2018 - are financialised

We focus on three areas of financialisaton
A)Growing balance sheet (debt and financial reserves) in relation to revenue
B)Payouts to shareholders
C)Intangibles as % of total assets

Between 2000 and 2018, the corporations grew their combined cash reserves from $83 to $219 Bn. As share of fixed capital it increased to 109%

These 27 corporations recorded $518 Bn of debt in 2018 compared to a mere $61 Bn in 2000. As share of net sales-> debt increased to 72%

Despite this surge in debt and growing reserves, investments in fixed capital decreased as a share of net sales -> 6% in 2000 to 5% in 2018

Total payouts to shareholders (dividends and share buybacks) have increased from 88% total R&D investments in 2000 to 123 % in 2018.

Total payouts (US$1,540 Bn) have exceeded R&D expenses (US$1,482 Bn) by US$58 Bn since 2000.

Intangible assets increased from $48 bn in 2000 to $857 bn in 2018. As % of total assets, intangibles exploded from 13% 2000 to 51% in 2018

As share of total assets – fixed assets declined and the valuation of intangibles (mostly goodwill) amplified

The corona virus pandemic revealed many of the underlying vulnerabilities of the financialised business model of Big Pharma. As well as the financial risks, this model has also left the world less prepared for the healthcare crisis we are facing today