Pharmaceutical Roundup: Lawsuits, Legislation and Growth Opportunities
Drug manufacturers and
distributors have been in the news lately. Here’s a roundup of some of the
The Opioid Crisis
In October of this year, three of
the biggest U.S. drug distributors and a drug manufacturer reached a $260
million settlement with two counties in Ohio that had sued them over the opioid
crisis. The counties claimed the drug companies launched an aggressive marketing
campaign to promote the highly addictive medications without sounding satisfactory
warnings about the risks. The settlement by no means ends litigation over the
opioid crisis; nearly 3,000 lawsuits, filed by city, county and tribal
governments, are still active.1
The cost of drugs continues to
soar in the U.S., with more than 3,400 medications experiencing price hikes
during the first half of 2019. About 40 of those drugs increased prices by more
than 100%, while certain others increased by substantially more — as much as
879%.2 Both President Donald Trump and lawmakers have been trying to
find ways to put a cap on drug spending growth but legislative efforts have
been hampered by the current political climate.3
Big Pharma’s global market is
poised for growth as the population ages. In 2018, the pharmaceutical industry grew
to a market capitalization of $1.2 trillion — up $100 billion from 2017. By
2023, the market is projected to reach $1.3 trillion.4
The drug market typically
represents a long-term investment, given the time it takes to develop, test and
bring new drugs to the public. However, one perhaps underappreciated benefit is
that many well-established pharmaceutical companies have been known to pay out reliable
dividends. This may be attractive to investors who want income from their
retirement portfolio.5 However, it is important to understand
dividends are paid at the discretion of the board of directors and are not
The China Market
China is the second-largest
pharmaceutical market in the world at $122.6 billion, and industry observers
expect that number to grow to as much as $175 billion by 2022. The country is
working to expand its presence in the sector and export more generic drugs as
part of its “Made in China 2025” plan.6
It’s up to each of us to create a strategy to help pay for potential
future health care expenses. If you are concerned about having enough income in
retirement for expenses like prescription drugs and other health care costs,
give us a call. We can help you consider your available options.
Content prepared by Kara Stefan Communications.
Mann and Colin Dwyer. NPR. Oct. 21, 2019. “Opioid Trial: 4 Companies Reach
Tentative Settlement With Ohio Counties.” https://www.npr.org/sections/health-shots/2019/10/21/771847539/opioid-trial-4-companies-reach-tentative-settlement-with-ohio-counties. Accessed Oct. 24, 2019.
2 Amy Baxter. HealthExec. July 3, 2019. “Drug prices are
soaring in 2019.” https://www.healthexec.com/topics/healthcare-economics/drug-prices-are-soaring-2019. Accessed Oct. 24, 2019.
3 Kate Patrick. Inside Sources. Sept. 25, 2019.
“Republicans Divided Over Drug Price Control Legislation.” https://www.insidesources.com/republicans-divided-over-drug-price-control-legislation/. Accessed Nov. 6, 2019.
4 Jocelyn Aspa. Investing News. Oct. 17, 2019. “Why
Consider Investing in Pharmaceutical Stocks?” https://investingnews.com/daily/life-science-investing/pharmaceutical-investing/investing-in-pharmaceutical-stocks/. Accessed Oct. 24, 2019.
5 Jeff Reeves. US News & World Report. May 16, 2019.
“9 of the Best Pharma Stocks to Buy for Income.” https://money.usnews.com/investing/dividends/slideshows/best-pharma-stocks-to-buy-for-income. Accessed Oct. 24, 2019.
6 Huileng Tan. CNBC. April 19, 2018. “China’s
pharmaceutical industry is poised for major growth.” https://www.cnbc.com/2018/04/19/chinas-pharmaceutical-industry-is-poised-for-major-growth.html. Accessed Nov. 6, 2019.
We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
Ready to Take The Next Step?
For more information about any of the products and services listed here, schedule a meeting today or register to attend a seminar.