KEY TAKEAWAY: Bruce Grant, an industry veteran recently said on LinkedIn “shareholder value” and value to society (or even customers) are not the same thing. And when they are in direct opposition, as in “activist investor”-driven pharma M&A — which to date has generated billions in fees for investment bankers and capital gains for the aforementioned “activist investors”while consistently destroying the long-term value of the companies involved — it should be called out for the kind of antisocial parasitism that it is”.
According to the WSJ “The same day Bristol-Myers Squibb Co. shook up its board to satisfy one activist investor, the drugmaker was faced with another: Carl Icahn, whose interest is fueling speculation the company could soon be put on the auction block”. Let’s be clear: Mr Icahn is in it to make money and patients and employees “be damned”.
The minute a clinical trial for drug fails the media doesn’t focus on the patients, who are the real losers, but rather the investors as the stock tanks. Very few pharma CEO’s have the courage to stand up to Wall Street and understand that helping patients is pharma’s first and foremost responsibility.
BMS at one time had over 70,000 employees, but today it has only 20,000. BMS led the charge in immune therapy oncology drugs, but its drug, Opdivo, has run into competition and bad news on some clinical trials. However, BMS get’s 6% of all sales of a competitor from Merck, Keytruda, which is using DTC to increase market share.
With Icahn now in control of a good share of stock BMS will now have to answer more questions about market share, price and profit, which means they will have less resources to develop and market their drugs. Icahn could care less about the people who are committed to helping patients or the patients themselves. He probably wants to force a sale so he can make more money to compensate for a shortfall in his anatomy.
I think it’s only a matter of time before pharma companies implement stock buyback programs so they can focus strategically on the future instead of analysts on the Street who only see the future in quarterly profits.