Michael,
I'm not quite sure where you're going with the MRK example, but it's useful to keep in mind what $6 billion means to a company like MRK. Their gross revenue is 23 billion and 17 billion is taken up by costs, leaving them $6b this year. They pay out $3.37 billion in dividends (a high dividend, post the Vioxx thing), leaving the company with approximately $2.63 billion going forward. They appear to be reinvesting almost all of this money, at least on a rolling basis, since they are only sitting on a total of about $6 billion in cash.
My understanding from friends inside the pharma business is these guys are on a treadmill trying to fund new product (the pipeline), joint ventures and acquisitions to stay ahead of the game. It is a tough business, ripe for trial lawyers and politicians to target, almost as juicy a target as big energy, and just as vital. I agree with your conclusions, but am not sure that their pricing in the US, given their costs and their potential streams of revenue outside the US, is excessive. I'm not sure how much fiscal relief tort reform could give them, either, but I sure would like to give it a try.
Kb |
