Financialization and productive models in the pharmaceutical industry

Abstract

This study analyzes the effects of financialization and competition on productive models in major pharmaceutical and biopharmaceutical companies and discusses current theses, which may help explain the transformation of productive models occurring under growing pressure from institutional investors and shareholder value management. We provide evidence of a large dispersion of shareholding and an increase in distribution of shareholder value occurring through large pharmaceutical companies. We show that large pharmaceutical companies have adopted a blockbuster model in an effort to maximize shareholder value, which is explained by various factors including financialization, technical change, product market regulations, and market competition. The stock market is used to make large acquisitions and control the US drug market, creating a growing dependency on stock performance and blockbuster drug sales. We describe how the process of financialization has impacted the biopharmaceutical industry and argue that the blockbuster model as a dominant productive model for the industry since the 1990s is unsustainable.