Downturn in Pharmaceutical Stocks

Max Sawicky sawicky at epinet.org
Fri Jun 4 14:28:17 PDT 1999



>
> Total return on investment, across all categories of
> drugs, is what matters, . . .

The joint products/pricing issue is well-taken, as far as it goes. But there is also the matter of rents earned on patents, and second, the issue of public subsidies (e.g., research at NIH) that made the patents possible. One could argue that even without explicit benefit of public subsidies, a patent in and of itself is a public subsidy (akin to corporate limited liability). Property rights can be thought of as subsidies, at least in some cases. Even in neo-classical economics.

As for stock prices, if somebody hasn't pointed it out already, there are the fundamentals stemming from such factors as above, but mostly there are the raging pecuniary hormones of investors.

mbs



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