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Financialization and productive models in the pharmaceutical industry

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  • Matthieu Montalban
  • Mustafa Erdem Sakinç

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. Copyright 2013 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Matthieu Montalban & Mustafa Erdem Sakinç, 2013. "Financialization and productive models in the pharmaceutical industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 981-1030, August.
    • Handle: RePEc:oup:indcch:v:22:y:2013:i:4:p:981-1030
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    Cited by:

    1. Samuel Klebaner, 2018. "Norm making and institutions dynamics: how the research program of the French Régulation Theory can be fertilized by the methodological concepts from the “Max-Planck-Institute for European Legal Histo," Cahiers du GREThA (2007-2019) 2018-25, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    2. Fumio Teramae & Tomohiro Makino & Yeongjoo Lim & Shintaro Sengoku & Kota Kodama, 2020. "Impact of Research and Development Strategy on Sustainable Growth in Multinational Pharmaceutical Companies," Sustainability, MDPI, vol. 12(13), pages 1-15, July.
    3. Jan Grumiller & Hannes Grohs & Christian Reiner, 2021. "“Increasing the resilience and security of supply ofproduction post-COVID-19” - The Case of Medical and Pharmaceutical Products," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 216, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    4. William Lazonick, 2018. "Comments on Gary Pisano: “toward a prescriptive theory of dynamic capabilities”," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(6), pages 1165-1174.
    5. Tristan Auvray & Joel Rabinovich, 2019. "The financialisation–offshoring nexus and the capital accumulation of US non-financial firms," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(5), pages 1183-1218.
    6. Philipp A. Thompson, 2019. "Financialization and Institutional Environments," Working Papers hal-02139457, HAL.
    7. Boutillier, Sophie & Laperche, Blandine & Lebert, Didier & Elouaer-Mrizak, Sana, 2023. "A systemic analysis of the technological trajectory at company level based on patent data: The case of Sanofi's vaccine technology," Technovation, Elsevier, vol. 124(C).
    8. Fumio Teramae & Tomohiro Makino & Yeongjoo Lim & Shintaro Sengoku & Kota Kodama, 2020. "International Strategy for Sustainable Growth in Multinational Pharmaceutical Companies," Sustainability, MDPI, vol. 12(3), pages 1-14, January.
    9. Klebaner, Samuel & Assogba, Guillaume, 2018. "Quelle cohérence pour la politique française de filières ? Les décalages entre la filière solidaire telle qu’elle devrait être et ce qu’elle est [What Coherence for the French “filières” Policy? Th," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 23.
    10. Bonizzi, Bruno & Kaltenbrunner, Annina & Powell, Jeffrey, 2019. "Subordinate financialization in emerging capitalist economies," Greenwich Papers in Political Economy 23044, University of Greenwich, Greenwich Political Economy Research Centre.
    11. Fumio Teramae & Tomohiro Makino & Shintaro Sengoku & Yeongjoo Lim & Takashi Natori & Kota Kodama, 2020. "Research on Pharmaceutical Product Life Cycle Patterns for Sustainable Growth," Sustainability, MDPI, vol. 12(21), pages 1-13, October.
    12. Hahn, Katrin, 2019. "Innovation in times of financialization: Do future-oriented innovation strategies suffer? Examples from German industry," Research Policy, Elsevier, vol. 48(4), pages 923-935.
    13. Nouguez, Etienne, 2020. "How much is your health worth? A research agenda on valuation processes and markets for medicines," economic sociology. perspectives and conversations, Max Planck Institute for the Study of Societies, vol. 21(3), pages 11-19.
    14. Halima Jibril & Annina Kaltenbrunner & Effi Kesidou, 2018. "Financialisation and innovation in emerging economics," FMM Working Paper 27-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    15. Enes Işık & Özgür Orhangazi, 2022. "Profitability and drug discovery," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 31(4), pages 891-904.
    16. Ciaran Driver & Maria João Coelho Guedes, 2017. "R&D and CEO departure date: do financial incentives make CEOs more opportunistic?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 801-820.
    17. Greffion, Jérôme & Breda, Thomas, 2015. "Façonner la prescription, influencer les médecins," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 17.
    18. Niall Reddy & Joel Rabinovich, 2022. "Debunking the short-termist thesis in financialization studies: Evidence from US non-financial corporations 1998 – 2018," Working Papers PKWP2227, Post Keynesian Economics Society (PKES).

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