Mar 5, 2020 - Health

Big Pharma is on a stock buyback spree

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Data: Company filings; Chart: Axios Visuals

In 2018, the year the Republican tax law went into full effect, 12 of the largest pharmaceutical companies spent more money buying back their stock than they spent on drug research and development.

The big picture: When billions of dollars became available to the biggest drug companies, their main priority was to juice earnings, along with the paydays of their executives and investors — not investments in new treatments or relief for patients who can't afford their drugs.

By the numbers: Axios analyzed the stock buybacks and R&D expenses of the 12 largest American pharmaceutical companies, by revenue, between 2016 and 2019.

  • These companies repurchased $69.1 billion of their stock in 2018, while spending $65.9 billion on researching new medicines.
  • Over the entire four-year period, stock buybacks for these 12 companies totaled $183 billion, and research expenses were $251 billion. They're sitting on another $47 billion that has been earmarked for stock buybacks.
  • Two drugmakers — Amgen and Biogen — spent more on stock buybacks for the entire period than they spent on R&D. Amgen's stock repurchases ($31.6 billion) were more than twice as much as research ($15.3 billion).

What they're saying: Amgen said in a statement that it repurchased large quantities of stock because the tax law allowed the company to bring home cash that was parked overseas. Biogen submitted a statement saying it has a "deep commitment to R&D," but did not address questions about its stock buybacks.

Go deeper: See the company-by-company analysis

Go deeper

The Trump administration's 180 on stock buybacks

Photo: Chip Somodevilla/Getty Images

President Trump told reporters on Thursday he would be "OK" with a conditional coronavirus bailout that bans stock buybacks for companies that receive federal relief.

Why it matters: Trump's tax cuts set off a record-setting buyback spree in corporate America. The comments are a shift in tone, given that his deputies have defended share repurchases in the past.

Companies hunker down for worst-case economic scenario

Illustration: Aïda Amer/Axios

What a difference a month makes.

Then: The nation's largest companies were on top of the world — buying back stock, watching their share prices flirt with all-time highs and hiring in droves.

Now: Corporate America is prepping for what could be a very lengthy and severe recession.

A lifeline emerges for the devastated airline industry

American Airlines planes parked at Los Angeles International Airport. Photo: Alex Tai/SOPA Images/LightRocket via Getty Images

Congress' massive $2 trillion coronavirus stimulus package includes $58 billion for U.S. airlines, half in grants to cover 750,000 employees' paychecks, and the rest in loans or loan guarantees to help them keep operating during the worst travel downturn in history.

Why it matters: With some 80 million U.S. residents under mandatory stay-at-home orders and the coronavirus pandemic continuing to spread, hardly anyone is flying these days. But when the public health crisis ends, airlines want to be able to take off again quickly.