One of the big pharma companies AbbVie in late June offered to buy another pharma company Allergan for $63 billion. Allergan best known product to consumers is Botox. In the world of big pharma, they have patents on drug treatments and they tend to run out after 21 years, which means the drugs which are billion dollar sellers would be replaced by generic drugs or the cost will fall dramatically, thus the companies are on the look out for billion dollar drugs. In an article by Michael Erman, Aukur Banergee and Julie Steenhuysen of Reuters, AbbVie has a drug called Humira which is used for arthritis treatment and soon will be losing patent protection. The drug brought in $20 billion to AbbVie last year and by 2023 will lose patent protection.
The cash flow from Humira allows AbbVie to buy Allergan.
Linking to dividend stocks, when investing in a big pharma company noticed which drugs are the billion dollar drugs and how long are they under patent protection. When lawmakers around the world discuss the high price of drugs, they are talking about why you wish to buy shares in the company. Lawmakers look for the day the patent protection comes down to lower the prices insurance companies need to pay for drugs. As investors, you love the cash flow from the drugs, as a consumer you need good insurance hopefully your dividends pay for the insurance
There are more questions than answers, till the next time – to raising questions.